As a member of the Eurozone, Greece was/is unable to conductit’s own monetary policy. Instead, Eurozone monetary policy is setby the European Central Bank in Frankfurt. Suppose that Greece isfacing a recession and wants to boost output.
1. What type of government policy would you suggest to boostoutput? Provide an IS-LM graph with a clear explanation of what youare suggesting.
2. How would the government fund such a policy?
3. What are some of the longer term implications of Greece usingthis approach to stabilizing output?
