macro economics north campus.docx - Final Term Examination Spring-2020 Subject macroeconomics Facilitator Exam Date Submission Deadline Faisal saleem

macro economics north campus.docx - Final Term Examination...

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Final Term Examination Spring-2020 Subject macroeconomics EDP / Section Code 01200131 8 Facilitator Faisal saleem Max. Marks 40 Exam Date 8-06-2020 Start Time 12:00 AM Submission Deadline 13-06-2020 End Time 12:00 PM INSTRUCTIONS: Attempt all questions: Question #1: Additional Case Study (8 marks) Greek Economy Read the following case study carefully and answer the questions given below: In 2010 the Greek government had to inform the European Commission on how it would control its budget deficit and improve the performance of its economy. The government’s debt is so high that agencies assessing the creditworthiness of the government downgraded and deficit to rise, it (which would mean more interest has to be paid to raise finance). Proposals were likely to include a 10% cut in government expenditures. 1. Outline two possible economic objectives of the Greek government. 2. Explain why the government’s budget deficit might be in a large deficit. 3. What would the effect on overall demand be if the government cut public expenditures by 10%?
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