Question

To combat recessions and depressions, which should have priority: unemployment or debt reduction? Justify your position.

Answer 1

both the given situations are serious concerns and basic reasons for the causes of recession and depression.

• if we take the reference of 1929's depression,the main reason was the huge debt and excessive market dealings over huge leverage and margin which was concerned with buy now pay later concept.huge debt was the reason for the market crash and the credit bubble was burst.
• therefore the first priority would be to maintain the level of debt and reduce the level of debt,because if employment is generated through the borrowed money then it would help in short run,but in the long run it would create serious economic crisis.therefore only reasonable debt should be borrowed that too for only productive activity which would automatically reduce the unemployment level.