Politicians have an incentive to push the unemployment rate below the natural rate of unemployment right before their reelection because:

Question

Quizplus · Accepted Answer

Politicians typically care more about being reelected than the long-term economic consequences of their policies. Lowering the unemployment rate below the natural rate may provide a short-term boost to their popularity, but it can lead to higher inflation and other negative economic consequences in the long run. This is known as the "political business cycle."

Politicians Have an Incentive to Push the Unemployment Rate Below