Recall the Application about the links between presidential elections and macroeconomic performance to answer the following question(s) . Early theories on the links between presidential elections and macroeconomic performance focused on incumbent presidents trying to manipulate the economy in their favor to gain reelection. Subsequent research began to incorporate other factors. The first innovation was recognizing that political parties can have different goals or preferences on how to manipulate the economy. In the United States, Republicans historically have been more concerned about fighting inflation, whereas Democrats have concentrated on reducing unemployment. The second major innovation was recognizing that the public would anticipate that politicians will try to manipulate the economy before an election.
-Historically, Democrats have been known to be primarily concerned with fighting unemployment. Assuming this is true, then after a Democratic electoral victory, the public could anticipate which of the following economic actions to fight unemployment?
A) an increase in taxes and an increase in government spending
B) open market purchases and a decrease in taxes
C) open market sales and a decrease in government spending
D) a decrease in the discount rate and an increase in reserve requirements
Correct Answer:
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Q89: Figure 15.3 Q90: Describe the adjustment process of returning an Q91: How might economic policy be used to Q92: Figure 15.3 Q93: If GDP is higher than potential output, Q95: The Keynesian aggregate supply curve moves up Q96: What is a liquidity trap, and what Q97: What kind of policies can be used Q98: Figure 15.3 Q99: Figure 15.3 Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents