Question

Your country is in a serious economic mess. You are the economic adviser to your president who feels the government has done enough and the youths are lazy and that's why the country isn't going forward. What would be your advice to your president?

Answer 1

There are some observations that is driving these conclusions. Note that when the President feels that the government has done enough and the youths are lazy, it is an indication that the youth is largely unemployed and so unemployment rate is higher. Secondly the government budget is in deficit and debt is paramounting so that the government cannot do anymore spending.

One advice to the President in a situation where fiscal policy is now unable to resurrect the economy, is to reduce unemployment benefits that will encourage youth to take up jobs. This will also reduce the budget deficit. If these two are the only concerns than reducing unemployment benefits can work. If the youth is facing structural unemployment, that training with respect to new skills can be imparted. If there are other concerns, active and expansionary monetary policy can be used.