Which of the following best describes the notion of a "political business cycle"?
A)Politicians are more willing to cut taxes and increase government spending than they are to do the reverse.
B)Fiscal policy will result in alternating budget deficits and surpluses.
C)Politicians will use fiscal policy to cause output, real incomes, and employment to be rising prior to elections.
D)Despite good intentions, various timing lags will cause fiscal policy to reinforce the business cycle.

Question

Quizplus · Accepted Answer

The notion of a "political business cycle" refers to the use of fiscal policy by politicians to boost economic growth and increase employment in the period leading up to elections, with the aim of increasing their chances of being re-elected. This can result in a pattern of alternating periods of expansionary and contractionary fiscal policy, leading to fluctuations in the economy. Option A is true, but it does not fully capture the concept of a political business cycle. Option B is only partially correct, as it describes the outcome of fiscal policy rather than the political motivations behind it. Option D describes some of the challenges associated with implementing fiscal policy, but it does not specifically relate to the political business cycle.

Which of the Following Best Describes the Notion of a "Political