Question

Proponents of the notion of a "political business cycle" suggest that: 
A. The standardized budget is a better indicator of the state of the economy than the actual budget
B. Cyclical swings in the economy are produced by the inherent instability found in capitalist economies
C. A possible cause of economic fluctuations is due to the use of fiscal policy for political purposes
D. There is a tradeoff among goals that tends to make the economic policies of state and local governments procyclical

Answer 1

Answer:

C. A possible cause of economic fluctuations is due to the use of fiscal policy for political purposes.

Explanation:

During political business cycles the ups and downs of the economy are best explained through analyzing public policy. In a political business cycle we should expect that there will be some manipulations when using policy to try to make the politicians appear more competent than they are. In 1972, the Nixon administration basically increased the Social Security payments made to Seniors by 20%, 1972, was of course an election year, so the Nixon administration manipulated economic fluctuations due to his fiscal policy.