Assume a country has presidential elections every three years. If a political business cycle exists in this country, explain any differences in the average annual growth rates of output for each year of a typical administration

What will be an ideal response?


Political business cycles represent the outcomes of politically motivated policies that increase the chances of an incumbent's reelection. Specifically, policies that are implemented to increase the probability of reelection will cause, in theory, output growth to be higher in an election year. Such a cycle where output growth is highest just before an election is called a political business cycle. Because of the inflationary consequences of such a policy, it is more likely that contractionary policies would be implemented in the first year of any administration. So, we would expect output growth to be highest in the election year and lowest, depending on lags, in either the first or second year.

Economics

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The table above has the domestic demand and domestic supply schedules for a good. If the world price of the good is $10 and international trade occurs, then according to the table

A) domestic production is higher before trade than after trade. B) the country imports 16 units a day. C) the country imports 6 units a day. D) the country exports 6 units a day. E) the country exports 22 units a day.

Economics

A shadow price is a

a. price the producer will accept, rather than the price the producer tries to get b. price used by a planner to make a non-profitable project appear profitable c. disequilibrium price d. price that would exist in the absence of all market distortions e. none of the above

Economics

Business conduct that is illegal per se is illegal

a. only if there is no economic rationale for it b. only if it results in a monopoly c. without regard to its economic rationale or consequences d. only if it is prohibited by the Clayton Act e. whether or not Congress has passed legislation prohibiting the practice

Economics

The best available technology (BAT)

a. is the treatment technology that makes attaining the MCL feasible b. has no relationship with the MCL or the MCLG c. is the required technology that must be used by public water suppliers d. is part of the secondary drinking water standards

Economics