Question

What was the main cause of the Greek Financial Crisis? How would you resolve this situation?

Define how the solution’s success will be measured, such as time to implement, economy measurements such as GDP.

Answer 1

Cause:

The major cause of Greek Financial crisis was the sovereign debt taken by the Greek government. The government was unable to repay the debt which led to increase in Debt/GDP ratio and several corrective measures taken by governmnet slowed down th egrowth of economy and leading to unemployment

Resolve:

Certain reforms can be adopted like:

- Increase in taxes

- Decrease in subsidy

It will help in increasing revenues and reducing expenses thus ultimately reducing govt. deficit and increasing ability to repay the debt

The success could be measured by looking at certain ratios like Debt/GDP, unemployment rate, subsidies provided by government, etc