Which statement is consistent with the political business cycle theory?
A) The economy expands after the elections.
B) The economy contracts after the elections.
C) The economy expands before the elections.
D) The economy contracts before the elections.

Question

Quizplus · Accepted Answer

The political business cycle theory suggests that politicians may manipulate the economy to enhance their chances of re-election. Therefore, the economy tends to expand before elections to create a favorable economic environment for the incumbent to win. It is consistent with choice C.

Which Statement Is Consistent with the Political Business Cycle Theory