Economics Test – Macroeconomics (Greek Unemployment)

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28 Οκτ 2013 (πριν από 3 χρόνια και 9 μήνες)

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Economics Test


Macroeconomics






Name:


1.

Study the extract below and answer the questions that follow.



Greek Feb Unemployment Rises To 12.1%

By Nick Skrekas Special to DOW JONES NEWSWIRES


ATHENS (Dow Jones)
--
Greek
unemployment

rose to 12.1% in February f rom 11.3% in January and much higher than the 9.1% reading f or February
2009, the National Statistical Serv ice said Tuesday.

The labor market is expected to continue to deteriorate in the coming months due to new austerity meas
ures which will lead to plunging demand, large
lev els of spare capacity and an increasingly worry ing economic outlook.

"The unemploy ment rate is on a rising trend due to austerity measures that will hit the domestic economy more sev erely in com
ing months,
" said
Platon Monokroussos, head of f inancial market research at Eurobank.

According to the European Commission, Greek unemploy ment is expected to rise to 11.8% this y ear f rom 9.5% in 2009, with a f ur
ther rise in 2011 to
13.2%.

The statistics serv ice sai
d unemploy ment remains a more serious problem f or women, with a jobless rate of 15.3% in February. Youth unemploy ment
also remains persistently high across Greece with 32% of 15
-
to
-
24
-
y ear
-
olds out of work.

The gov ernment said it had little choice but to
tighten
fiscal policy
--
cutting pensions and public
-
sector wages and raising v alue
-
added tax and excise
duties
--
in exchange f or access to a EUR110 billion bailout prov ided by the International Moneta
ry Fund and the European Union. The bailout was
made
necessary by the real risk that the Greek gov ernment, which f or y ears has spent f ar more than it has collected in taxes, woul
d not be able to pay
its debts.

But unions hav e warned the gov ernment that these unprecedented measures are too ha
r
sh and unf air an
d will only lead to spiraling unemploy ment
rates and a breakdown in social cohesion.

The two main priv ate
-
sector and public
-
sector unions hav e called f or a strike May 20 which is set to paraly ze the country.

-
By Nick Skrekas, contributing to Dow Jones Ne
wswires; +30 210 2830 685;

nskrekas@trk.f orthnet.gr






a)

Define the following terms indicated in bold in the text:


i.

Unemployment


ii.

Fiscal Policy



b)

Using an appropriate diagram, explain how the government’s proposed fiscal austerity measures
will likely
affect the Greek economy.





c)

Using an appropriate diagram, explain how the unions’ general strike in response to the
austerity measures will affect the economy
.





d)

Using information from the text and your knowledge of economics, evaluate the likely effec
ts of
the government’s fiscal austerity measures on the Greek economy, in both the short and the
long term.






2.

Answer ONE of the following short answer questions:


a.

Explain how supply side policies differ from demand management policies.






b.

Explain the methods by which governments can improve a country’s income
distribution.