In a large pot, heat the oil over medium heat. Sauté the chopped onion until softened. Add the crushed garlic and cook for another minute until fragrant.
Add the cubed beef and brown it on all sides for 5-6 minutes. Sprinkle with Hungarian sweet paprika and stir well to coat.
Pour in 1 liter of water, then add the caraway seeds, bay leaves, salt, and pepper. Bring to a simmer, then reduce heat to medium-low and cook for 1 hour, or until the beef starts to tenderize.
Add the sliced carrots, parsnip, and cubed potatoes. Pour in the remaining 1 liter of water and cook for another 30 minutes, or until the vegetables are tender.
Add the sliced smoked sausage and cook for another 10 minutes, allowing the flavors to meld together beautifully.
Serve the goulash soup hot, garnished with fresh parsley. Serve with fresh bread or small egg dumplings (csipetke), if desired.
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