What causes economic booms and busts?

To understand the answer to this question, we first have to understand the Austrian Business Cycle Theory (ABCT):

One common misconception of the ABCT is that it is about the effects of over-investments in the economy. In reality, the ABCT is more about mal-investments instead. To understand the idea of mal-investment, it is crucial to understand the concept capital structure, which is a distinguishing feature of the Austrian School of economic thought:

To further understand the idea of mal-investment, an example is given: