Proponents of the notion of a "political business cycle" suggest that:
A)the cyclically adjusted budget is a better indicator of the state of the economy than the actual budget.
B)cyclical swings in the economy are produced by the inherent instability found in capitalist economies.
C)a possible cause of economic fluctuations is due to the use of fiscal policy for political purposes.
D)there is a trade-off among goals that tends to make the economic policies of state and local governments pro-cyclical.

Question

Quizplus · Accepted Answer

The notion of a "political business cycle" suggests that economic fluctuations may be caused by the use of fiscal policy for political purposes. This means that politicians use economic policy tools (such as government spending and taxation) to influence the economy in order to improve their chances of reelection or to benefit their political party. As a result, economic policies may be implemented at the wrong time or in an inappropriate manner, leading to economic fluctuations.

Proponents of the Notion of a "Political Business Cycle" Suggest