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Policians: Economic Growth

The U. S. and the World economy is still in a period of slow growth and high unemployment. Since we in the U. S. are already in an election year, does the Political Business Cycle still exist? Do incumbent politicians use their power and influence to get reelected? Is this a "valid" use of political power? How does this impact business firms?

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Political Business Cycles still exist. This means expansionary fiscal and monetary policies are formed to attract voters. In practice this means reduction in unemployment, falling interest rates, new government spending on services, and tax cuts. These actions are undertaken to increase popularity of the incumbent politicians. Before elections incumbent parties in the US have announced tax refunds, and increased government spending.

Incumbent politicians use their power and influence to get reelected. One method used is that incumbent politicians use taxpayer-paid tools to keep their names in public. They send informational newsletters with their names on them when they are in power. They use the power of their office to keep their names in ...

Solution Summary

The answer to this problem explains how economy is manipulated by politicians to remain in power. The references related to the answer are also included.