Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 36 - Part XIII - Six Debates over Macroeconomic Policy - Questions for Review - Page 815: 3

Answer

A central banker might be influenced by politicians (and push for expansionary policies right before the elections). This would be the reason that a central banker would could cause a political business cycle.

Work Step by Step

The political business cycle implies that the debate over policy rules would be toward expansionary policies if the current politician is likely to be re-elected.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.