If there is a political business cycle and the Federal Reserve supports the incumbent,then we should expect that prior to elections
A)interest rates and output would rise.
B)interest rates would rise and output would fall.
C)interest rates would fall and output would rise.
D)interest rates and output would fall.

Question

Quizplus · Accepted Answer

If the Federal Reserve supports the incumbent, it may lower interest rates to stimulate the economy, leading to increased output before elections.

If There Is a Political Business Cycle and the Federal