The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of
economic instability.

Name: The concept of a "political business cycle" implies a misuse of ﬁscal policy making it a source of economic instability.
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Question

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The political business cycle theory suggests that politicians may manipulate fiscal policy to influence the economy in order to gain re-election. This can lead to instability as economic decisions are made for political rather than economic reasons.

The Concept of a "Political Business Cycle" Implies a Misuse