Question

A situation in which monetary policy is expansionary prior to an election and contractionary after an election is known as the â–¼ easing of monetary policy instrument independence political business cycle open market operations .

Answer 1

A situation in which monetary policy is expansionary prior to an election and contractionary after an election is known as the Political business cycle.

What is expansionary monetary policy and contractionary monetary policy?

Simply put, expansionary monetary policy enlarges (increases) the money supply, whereas contractionary monetary policy reduces (contracts) the amount of a nation's currency available.

What is Political business cycle?

A political business cycle is a change in economic activity brought on by outside political actors. The term "political business cycle" is mostly used to refer to the economic expansion that occurs right before an election to increase the likelihood that the current administration will be reelected. Empirical evidence of political business cycles is still ambiguous despite several attempts to prove it.

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