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The Pros And Cons Of The Greek Government

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together can be a bad action taken by the government. The reason I say this is because, in economic terms, reduction in government spending and increasing tax collection at the same time is like hitting someone with two hammers together. This will only lead to a shift to the left of aggregate demand and is it impossible for the people to pay taxes when the living standards is low. (Figure 2) (Figure2) Showing aggregate demand shifting to the left.

Additionally, the Greek government has also implement healthcare and pension reforms, banning increases of pensions for at least three years. (Hewitt. Gavin, 2010). On the other hand, the super-national government ECB has also launched the Securities Market Program, which allows the ECB to start buying government bonds in order to fight the crisis. Hoping to able to pump more money …show more content…

The governments mainly reduce spending cuts and increases tax on both the nation and firms, and back to applying economics belief, the action will only cause a contraction of the aggregate demand of the whole economy, hence, reducing GDP. It is reported that the fiscal measure includes a 60 percent revenue and 40 percent spending cuts. These actions, has decreased the willingness of firms and companies to invest since the after-tax return has been reduced. Next, the of cutting government spending can also mean less jobs for the peoples in the public sector. Unemployment rate increasing from 9.4% to 11.3% (Ferreira.Joana,2017). Using the multiplier effect will be the best to explain, when there is less jobs for the people, it will mean no income for the unemployed and a drop in purchasing power, more importantly it will be very hard for the people to pay the high taxes. It is also reported that the bailout money has all been used to repay the banks instead of using it to correct the

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