Question

1.Which should Greece focus more attention on: reducing government debtor reducing the unemployment rate? Discuss.

2.Discuss possible ways Greece can reduce its high unemployment rate.

Answer 1

Answer:-

1.Reducing government deter may be detremental to the economic growth itself. Here if both govt. and the idustrialists get stop to have their loans then, it may impede the growth. The creation of wealth may off set the burden off debt adequately. But if there is large unemployment then it would not be a good scenario. There would be lack of demand, might occur social unrest and so on. Even to cure that if debt is taken then, it might be a debt trap. Hence, it is better to curb down unemployment.

2.Government should increase its spending. Carry out more fiscal expansion and create jobs thorugh public works program. right now the government is focussed on cutting spending in order to address the debt burden. this is a medicine which will worsen the disease.

adopt a lenient monetary policy : this is something which Greece unfortunately cannnot do as monetary policy is set by ECB. Greece has no option but to seek a Grexit here.However, this would also mean losing access to free trade markets.