The political business cycle refers to the possibility that

Question

Multiple Choice
incumbent politicians will be re-elected regardless of the state of the economy.
politicians will manipulate the economy to enhance their chances of being re-elected.
there is more inflation during Democratic administrations than during Republican administrations.
recessions coincide with election years.

Answer 1

The correct choice is:

politicians will manipulate the economy to enhance their chances of being re-elected.

The political business cycle theory suggests that incumbent politicians may implement certain economic policies that are intended to improve economic conditions (such as increasing government spending or cutting taxes) before elections to boost their chances of re-election.