Assume that political business cycles do not exist. Given this assumption, we would expect, all else fixed, the output growth to be highest in which period?
A) Just prior to an election.
B) In the second year of a government.
C) In the first year of a government.
D) Just after an election.
E) None of the above.

Question

Quizplus · Accepted Answer

If political business cycles do not exist, the timing of elections would have no impact on output growth. Therefore, output growth would not be expected to be highest in any specific period related to the electoral cycle, making "None of the above" the correct choice.

Assume That Political Business Cycles Do Not Exist