Causes Of Unemployment In Greece

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Unemployment refers to the condition of someone of working age (16-64) who is willing and able to work, actively seeking employment, but unable to find a job.
The rate of unemployment in Greece for the people of ages 15 to 24, who is considered as the younger group of workers, was 48.3%. Compared to the people of ages 25 to 34 was 32.1%. The data shows that young people are more affected than older people, however, Greece’s overall unemployment rate is still high for all the group of ages. It has been happening since 2009 when the Greek government-debt crisis started because of the change of the leaders and structural weaknesses. According to the article, “Greece’s unemployment rates have surged in the past seven years amid cuts in public
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This occurs during the downturns of the business cycle, when the economy is in a recessionary gap.

Figure 1 is showing the situation of unemployment in Greece. A fall in aggregate demand will cause a leftward shift in the AD curve from AD1 to AD2. This causes the real GDP to fall and makes firms start to dismiss employers, so increase in unemployment. The long run aggregate supply (LRAS) curved is also decreased in read output from Y1 to YFE as well as a decrease in average price level in the economy. There is a big recessionary gap between Y1 and YFE.

So what does exactly happen when there is a high unemployment rate? The country wants low rate of unemployment because high unemployment brings some costs in an economy. Firstly, those who are unemployed will not receive any wages, means they face money crisis. Secondly, it can lead to government costs; increase in unemployment means that they need to give unemployed people for some social welfare. On the other hand, tax revenue will decrease because there are less tax payers. The unemployment also causes to increase crime rate, homeless people and poverty. Cyclical employment has effects upon its economy in Greece for both short and long term. In the short run, the firms will sell lesser goods at a lower price, and that makes a negative impact
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The expansionary fiscal policy is designed by the government to speed up the economy. It is often used to address unemployment problems created by a business cycle contraction. The Greece government can set out policies decreasing in taxes, increasing in government spending or increasing in government spending to shift aggregate demand to the right, so to close the recessionary gap. In addition, the Greece central bank could apply monetary policy by putting lower interest rates or increasing the money
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