In a Dutch oven or large heavy pot, sauté onion in olive oil until translucent. Add garlic, 1/4 tsp. paprika and beef cubes. (For extra flavor, toss beef cubes in 2 tbsp. flour evenly before browning).
Stir well. Add bay leaf. Cover and simmer over very low heat for 1 hour.
Add 1 tsp. paprika and garlic powder. Cover and simmer for another hour or until beef is tender.
30 minutes before the goulash is ready, stir in caraway seeds and remove the bay leaf. At the same time, add a little more water or beef broth if needed.
Variations: May be served over wide egg noodles or boiled potatoes (potatoes cubes can also be added during the last 45 minutes of cooking). Sometimes we stir in sour cream just before serving.