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3 votes
Identify behaviors that are often associated with Tension Reduction in the CPI Crisis Development Model?

1) Increased government spending
2) Decreased consumer spending
3) Increased interest rates
4)ecreased unemployment rates

1 Answer

6 votes

Final answer:

During a recession, governments tackle economic downturns through expansionary fiscal policies, such as lower taxes or increased government spending, and expansionary monetary policies, like increasing the money supply and lowering interest rates. These measures aim to stimulate economic activity and reduce unemployment, though they can lead to higher interest rates and subsequent contractionary effects if government debt increases.

Step-by-step explanation:

The question seems to be a mix-up. It references both the CPI Crisis Development Model, which is related to behavioral interventions, and economic policies for recession, which falls under economic studies. Since the latter is more coherent with the provided reference information, I will address behaviors associated with government actions to reduce tension during an economic recession.

During a recession, the government can employ various strategies to alleviate the economic downturn. One approach is expansionary fiscal policy, which includes measures like lower taxes or increased government spending. These actions are designed to stimulate economic activity and reduce unemployment. Another approach is expansionary monetary policy, which involves increasing the money supply and lowering interest rates to encourage borrowing and investment. Both policies aim to stimulate output and decrease unemployment rates.

However, there could be downsides to these policies. For instance, increasing government spending may lead to higher interest rates if it results in increased government debt. This could make financing government debt more expensive and may force the government to cut spending or raise taxes later, which has a contractionary effect on the economy.

answered
User Aaron Dancygier
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