Question

The political business cycle refers to Group of answer choices the fact that about every four years some politician advocates greater government control of the Fed. the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected. the part of the business cycle caused by the reluctance of politicians to smooth the business cycle. changes in output created by the monetary rule the Fed must follow.

Answer 1

the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected.

Step-by-step explanation:

A political business cycle can be defined as a business cycle that typically arises from the manipulation and tweaking of economic policy tools such as fiscal policy and monetary policy by incumbent (serving) politicians, in order to stimulate and enhance the economy of a particular country before an election. Thus, this would go a long way to boost the chances of the candidate representing the particular political party and reelection into office by the people.

Hence, the political business cycle refers to the potential for a central bank to increase the money supply and therefore real GDP to help the incumbent get re-elected.

The Gross Domestic Products (GDP) is a measure of the total market value of all finished goods and services made within a country during a specific period.

Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country.

Basically, the four (4) major expenditure categories of GDP are consumption (C), investment (I), government purchases (G), and net exports (N).

Additionally, Gross Domestic Products (GDP) of a country's economy gives an insight to it's social well-being such as Real GDP.