Case study: Greek economy In 2010 the Greek government had to inform the European Commission on how it would control its

[answerhappygod]

Case study: Greek economy In 2010 the Greek government had to
inform the European Commission on how it would control its budget
deficit and improve the performance of its economy. The
government’s debt is so high that agencies assessing the
creditworthiness of the government downgraded it (which would mean
more interest has to be paid to raise finance). Proposals were
likely to include a 10% cut in government spending. Questions
Outline two possible economic objectives of the Greek government.
(10 marks) Explain why the government’s budget deficit might be in
a large deficit. (5 marks) What would the effect on aggregate
demand be if the government cut public spending by 10%? (10 marks)
What actions can the government take to increase national income
growth in Greece? (10 marks) If the Greek economy is in recession
what would you expect to be the effect on: a) Inflation? b)
Unemployment? c) Imports? Explain your answers. (15 marks)