When generating a political business cycle, a politician chooses lower unemployment in the _______ over inflation and crowding out in the _______.
A) short run; long run
B) long run; long run
C) long run; short run
D) short run; short run

Question

Quizplus · Accepted Answer

The politician would choose lower unemployment in the short run because this would help their re-election chances by improving the overall economic conditions. Inflation and crowding out in the long run may harm the economy and lead to political backlash, but these consequences may not be immediately visible to voters.

When Generating a Political Business Cycle, a Politician Chooses Lower