Recall the Application about Fed Chairman Ben Bernanke's views on how to fight a liquidity trap to answer the following question(s).
-The classic political business cycle would have a politician following
A) expansionary policies before an election, and contractionary policies after the election.
B) contractionary policies before an election, and expansionary policies after the election.
C) expansionary policies before and after an election.
D) contractionary policies before and after an election.

Question

Quizplus · Accepted Answer

The classic political business cycle theory suggests that politicians would implement expansionary policies (such as tax cuts or increased government spending) before an election to stimulate the economy and improve their chances of reelection. After the election, they would then implement contractionary policies to counteract the inflationary effects of the pre-election expansionary policies.

Recall the Application About Fed Chairman Ben Bernanke's Views on How