The political business cycle refers to the phenomenon that just before elections,politicians enact ________ policies. After the elections,the bad effects of these policies (for example,________ )have to be counteracted with ________ policies.

Question

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The political business cycle theory suggests that politicians, seeking re-election, may implement expansionary policies (such as tax cuts or increased government spending) to stimulate the economy and improve their chances of re-election. These policies can lead to a higher inflation rate. After the election, to counteract the inflation and other negative effects of the expansionary policies, they may then implement contractionary policies.

The Political Business Cycle Refers to the Phenomenon That Just