The hypothesis of political business cycles asserts that
A)politicians can produce a favorable short-run tradeoff between inflation and unemployment to improve their chances of reelection.
B)economic expansions and contractions are functions of congressional support for the president's economic policy.
C)political popularity is not a function of the business cycle.
D)an economic recession takes place before every national election.
E)political manipulation of the business cycle is an effective way to increase permanent economic growth.

Question

Quizplus · Accepted Answer

The hypothesis of political business cycles suggests that politicians manipulate economic policies in order to improve their chances of reelection. This can include producing a favorable short-run tradeoff between inflation and unemployment. Option B is incorrect because the hypothesis does not suggest that economic cycles are solely based on congressional support for the president's economic policy. Option C is also incorrect because political popularity is often influenced by the state of the economy. Option D is incorrect because there is no guarantee that a recession will occur before every national election. Option E is incorrect because the hypothesis does not suggest that political manipulation of the business cycle leads to permanent economic growth.

The Hypothesis of Political Business Cycles Asserts That