Question
In many developing countries fiscal deficits tend to rise during election years. Which one of the following is a more likely explanation for this pattern?
In many developing countries fiscal deficits tend to rise during election years. Which one of the following is a more likely explanation for this pattern?
a.Elections are typically scheduled during economic slowdowns when tax revenues decline.
b.The public does not realize that high deficits could eventually cause macroeconomic instability and always demands high fiscal deficits, but incumbent politicians know the problem and resist that demand due to their public spirit, except when they face the challenge of reelections.
c.Incumbent politicians understand that persistent deficits could cause macroeconomic instability and turn the public against them, but they are tempted to spend more and prop up employment and incomes of pivotal voter groups, thus buying their support at election times.
d.Incumbent politicians tend to pay back the government debt at the end of their terms before elections so that the next government that takes office after the election can start with a clean slate.
e.Incumbent politicians want to generate support for themselves among people who save large parts of their incomes by getting the government to act as a safe borrower of those savings.
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