Political business cycles occur because voters are:

Question

Quizplus · Accepted Answer

Political business cycles occur because voters are rationally ignorant by not looking at economic conditions over a president's entire term. This means that voters tend to judge the performance of politicians based on the economic conditions prevailing during the election year, rather than the entire term. As a result, politicians tend to manipulate economic conditions in the election year, often by increasing public spending and reducing taxes, to increase their chances of re-election. This results in a cycle of economic expansion during election years, followed by contraction in non-election years.

Political Business Cycles Occur Because Voters Are