Political business cycles are economic fluctuations that occur when discretionary policy is manipulated for political gain. So, the correct answer is (c).
In election years, governments are seen to implement fiscal policies and frequently financial policies, which is known as the political business cycle. In this situation, fiscal expansion can be accomplished through both tax reductions and stimulus spending.
Short-term effects of expansionary monetary and fiscal policy include declining unemployment, economic growth, and gains from additional government spending on public services. However, it is found that the same measures, specifically if followed excessively, have unfavorable effects over time, such as rising inflation and harming the balance of trade. The main purpose behind implementing political business cycle is to get existing government reelected.
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