# data[].attributes.body
- Interventionist policies such as increasing government expenditure on education, training, and healthcare

- Government spending on education and training improves workers' skills and their stock of human capital (the knowledge and skills acquired by a worker through education and experience used to produce goods and services)

- A well educated workforce also acts as an attraction for foreign investment in the economy. This will  improve the economic outlook and confidence in Europe's economy thus increasing investment

- A healthy workforce also reduces loss in work days due to medical leave and improves productivity

- All these act to to expand productive capacity in the long run so as to stimulate economic growth and maintain price stability

# data[].attributes.body
I used to think that countries in Europe had stable economies and that they were mostly better off than the United States in terms of their national debts. I also thought that they were enjoying sustained economic growth and very stable prices throughout the continent.

- Dexter

# data[].attributes.body
the cause of europe's recession is high marginal propensity to save and import, poor consumer confidence of the future economy and increasing structural unemployment.

-the usage of expansionary fiscal policy should be focused on increasing government expenditure, especially on areas such as infrastructure and subsidizing the cost of training and upgrading the skills of Europe's workers and reducing corporate tax only. This would encourage entrepreneurs to set up new firms that can make Europe relevant in the evolving international economy. In addition, Europe's AD would shift right due to increase in G and I, hence resolving Europe's recession. When G increase is due to expenditure on developmental infrastructure, training workers and R&D, coupled with an increase in I, the LRAS would increase and hence curb stagflation. This would also resolve Europe's structural unemployment since workers undergo retraining and skills upgrade. Also, when the Europeans see that the government is spending more on developmental infrastructure and workers are becoming more relevant due to retraining, they would become more optimistic about the future of Europe's economy and hence save less. Thus, MPS would decrease and the multiplier effect on the economy due to increases in G and I would take place to a much fuller extent.

-the usage of expansionary monetary policy should be focused on devaluing the Euro rather than reducing interest rates. Since the PED of M is inelastic and PED of X is elastic, by devaluing the Euro, there would be a more than proportional increase in QD for X and a less than proportional decrease in QD for M. Net value of exports would increase nonetheless and hence AD would increase, resolving Europe's recession. Europe is facing a problem of high MPM as Europeans are 'addicted to all things foreign'. Thus, if interest rates were to fall, the Europeans would only spend more on foreign big ticket items such as foreign cars. There would be a leakage in the Europe's economy and multiplier would not take place to the fullest potential. Hence, expansionary MP should focus on the ER of Europe.

-the usage of supply side policy would ensure that European workers remain relevant in the economy by training workers to operate capital goods and hence turning the economy into capital intensive industry. As workers see that they would not stay out of jobs for long, they would not save as much as before. The usage of market oriented supply side policy would ensure that local firms produce most efficiently and pass the lower cost of production to consumers in the form of lower prices. This would help reduce the fluctuations in the general price levels of Europe's economy and hence investors are able to better predict the future of Europe's economy and thus invest more into Europe's economy. In addition, more competition forces the Europe economy towards certain industries as entrepreneurs have to set up a firm in an industry which has a stable demand for, allowing new firms to compete with each other without fear of the industry closing down. Workers would be hired into these more relevant industries. Workers without the necessary skills can train themselves to specialize in these industries with the help of the government subsidy on skills training. Hence, workers would remain relevant and structural unemployment would be reduced. Hence they would spend more as they are certain of their employability, assuming the income elasticity of demand for M is inelastic, therefore increasing C while improving consumer expectation of future economy. In addition, with 2 expansionary policies in place, it is highly possible that the economy overheats and cause inflation. This can be resolved when ss side policy is in play. This increases the maximum productive capacity of the economy while removing any supply bottlenecks, thereby making it easier for the economy to meet up with the rising demand for goods due to greater purchasing power from higher disposable income levels. When investors see that general price levels would stabilise in the future due to reducing supply bottlenecks, their mindset of Europe having a poor economy would change and hence they would invest more.

-since Europe's recession is caused by multiple reasons, it is wise to implement a cocktail of policies to ensure that each policy complement each other and covers up what the other lacks in. Hence, with multiple policies in place, Europe would be able to get out of her recession and resolve her other economic problems.

# data[].attributes.body
I used to think that europe was facing a recession due to the debt crisis and negative economic growth.
desiree

# data[].attributes.body
Devaluation of Currency is not effective: If demand of exports and imports are price elastic, devaluation will result in a less than proportionate increase in the quantity demand fro exports and a less than proportionate increase in the quantity demanded of imports. This will decrease export revenue and increase import expenditure respectively. Devaluation will thus be ineffective in correcting a balance of payment deficit and it may even worsen the balance of payment deficit.

# data[].attributes.body
-Devaluation is the deliberate lowering of the currency's exchange rate.
- As the Exchange Rate is deliberately weakened, exports become relatively cheaper in foreign currency and imports become relatively more expensive. Assuming demand for exports and imports are price elastic and there is a high degree of substitutability between European goods and foreign goods, quantity demanded for european exports will increase more than proportionately while imports will experience a more than proportionate fall.
-A higher export revenue and lower import expenditure will increase the value of net exports (NX), increasing AD, ceteris paribus.
- A weak Euro will result in an increase in net exports and improvement in trade balance as long as marshall-lerner condition holds where the sum of price elasticities of demand for exports and imports > 1.
-Net export revenue (X-M) increases, improving current account balance and thereby reducing the balance of payment deficit, assuming ceteris paribus

desiree

# data[].attributes.body
-Expansionary FP is effective as: europe experiences increasing unemployment. spending more on current expenditure such as wages of civil workers improves employment. at the same time spending more on unemployment benefits allows the increasingly unemployed locals to have the ability to purchase and add on to the C component of the europe economy. AD would increase, iPONY, multiplier effect, multiple increases in the europe's economy, expansionary effects, curb europe recession
-Expansionary FP is not effective as: an increase in C would lead to a fall in AD, since there is high propensity to import and an increase in purchasing power would lead to increased consumer expenditure on imports, thereby worsening the CA account of europe and hence worsening europe's recession problem. high propensity to save too. leakage in the economy and hence AD is not able to increase to its fullest extent from expansionary FP

haoyang

# data[].attributes.body
i used to think that europe is a major trading partner of Asia and US and makes up majority of the world's economy.
haoyang

# data[].attributes.body
Europe's economic situation will continue to worsen and will be difficult to improve due to the slowdown of the economy of other developing countries. Hence, Europe needs to implement policies to boost economic growth.

# data[].attributes.body
High unemployment rates in countries like Italy and Spain (40%). There is a need for the use of Expansionary Fiscal Policy.
Exp FP:
Increase in G, decrease in T, in order to increase AD leading to an increase in employment rates.
(G) Increase in in G will immediately raise AD also stimulates C which in turn raises AD.
(T) Lower income taxes for households- households have higher disposable income-higher pp. consumer spending rises, firms hire more workers to increase production. experiencing higher profits- AD increases. Lower corporate taxes for firms- improves profitability of investments-stimulate FDI. I increases, AD increase.
Combined effect increases AD, and give rise to multiple expansions of NY and UNempt

# data[].attributes.body
Marcus: I used to think that Europe had one of the largest economy in the World and had been experiencing stable and sustained economic growth.

# data[].attributes.body
But now, I think that euro will continue to fall into recession unless they do something significant about it.

# data[].attributes.headline
But now, I think Europe's economy will suffer even more following the sharp falls in European equity markets, particularly of banking shares, since the start of the year. To the extent that this setback to stockmarkets undermines consumer and 
business confidence, it is likely to drag down growth. The slowdown in 
China and emerging economies, which account for a quarter of euro-zone 
exports, will also harm the recovery by hurting exporting companies. 
Germany will be particularly affected since the Chinese market has been a
 lucrative one for its exports of investment goods and luxury cars.

# data[].attributes.subject
But now, I think Europe's economy will suffer even more following the sharp falls in European equity markets, particularly of banking shares, since the start of the year. To the extent that this setback to stockmarkets undermines consumer and 
business confidence, it is likely to drag down growth. The slowdown in 
China and emerging economies, which account for a quarter of euro-zone 
exports, will also harm the recovery by hurting exporting companies. 
Germany will be particularly affected since the Chinese market has been a
 lucrative one for its exports of investment goods and luxury cars.

# data[].attributes.body
Wei Yang

# data[].attributes.body
Europe is a very large economy, ranked third only after China and United States. Europe has a thriving manufacturing sector. However, because of higher wages and costs of productions, Europe is suffering from deindustrialisation and off-shoring in the labour intensive manufacturing sectors. This means that manufacturing has become less important and that jobs are moved to regions with cheaper labour costs such as China.

# data[].attributes.body
Europe is edging towards stagflation and deflation. Debt burdens increases throughout, significantly in Italy and Greece. Thus, investors have poor economic outlook and confidence in Europe's economy hence decreasing investment.

# data[].attributes.headline
I used to think that Europe had a stable economy.

# data[].attributes.subject
I used to think that Europe had a stable economy.

# data[].attributes.body
Wei Yang

# data[].attributes.body
-Poor consumer expectations about the future -> less consumption, fall in C.
-There will also be increased savings
-Increase in unemployment rate in Italy and Spain - 40%
-Low inflation rate of 0.3%
-An increase in C will result in a fall in AD, multiplier effect triggered thus euro falls to an even worse recession

# data[].attributes.body
I used to think Europe is an economy that is very well sustained and experiencing economic growth

# data[].attributes.body
Now, I want you to think about how your ideas about Europe's economy has changed as a result of what your team has been discussing whilst completing the task above. Again in just a few sentences write down what you now think about  Europe's economy. Start your sentences with,

“But now, I think…”

Each of you must post your response in the space below this box.

# data[].attributes.headline
Task 3: Based on the findings from Task 1, One of your team members will need to address the policies to solve this problem.

# data[].attributes.subject
Task 3: Based on the findings from Task 1, One of your team members will need to address the policies to solve this problem.

# data[].attributes.body
Explain and evaluate the use of 3 policies

# data[].attributes.headline
Task 2: One of your team member will also need to find out the current nature or structure of your economy, supported with research (eg news paper articles or video)

# data[].attributes.subject
Task 2: One of your team member will also need to find out the current nature or structure of your economy, supported with research (eg news paper articles or video)

# data[].attributes.body
For example, is it a small and open economy? Is it a large economy? Is the economy an export-driven economy? Is it undergoing any structural changes? Please upload the links here too.

# data[].attributes.headline
 Task 1: Two of your team members in your cabinet need to identify the top macroeconomic problems your country is facing. Other than the video clip and newspaper provided in this page, you will need to do research (eg news  paper articles) and thereafter post in this wall.  Explain the potential sources of these macroeconomic problems your country is facing.

# data[].attributes.subject
 Task 1: Two of your team members in your cabinet need to identify the top macroeconomic problems your country is facing. Other than the video clip and newspaper provided in this page, you will need to do research (eg news  paper articles) and thereafter post in this wall.  Explain the potential sources of these macroeconomic problems your country is facing.

# data[].attributes.body
Please write your response here, or you may just add new post. Use economic analysis (for example ADAS analysis) in your answers where possible.

# data[].attributes.attachment_link.readable_text
THE world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan's economy is struggling and China's growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond. But the biggest economic threat, by far, comes from continental Europe.

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank's president, to do "whatever it takes" to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone's overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Optimists, both inside and outside Europe, often cite the example of Japan. It fell into deflation in the late-1990s, with unpleasant but not apocalyptic consequences for both itself and the world economy. But the euro zone poses far greater risks. Unlike Japan, the euro zone is not an isolated case: from China to America inflation is worryingly low, and slipping. And, unlike Japan, which has a homogenous, stoic society, the euro area cannot hang together through years of economic sclerosis and falling prices. As debt burdens soar from Italy to Greece, investors will take fright, populist politicians will gain ground, and-sooner rather than later-the euro will collapse.

This parrot has ceased to be

Although many Europeans, especially the Germans, have been brought up to fear inflation, deflation can be still more savage (see article). If people and firms expect prices to fall, they stop spending, and as demand sinks, loan defaults rise. That was what happened in the Great Depression, with especially dire consequences in Germany in the early 1930s.

So it is worrying that, of the 46 countries whose central banks target inflation, 30 are below their target. Some price falls are welcome. Tumbling oil prices, in particular, have given consumers' incomes a boost (see article). But slowing prices and stagnant wages owe more to weak demand in the economy and roughly 45m workers are jobless in the rich OECD countries. Investors are starting to expect lower inflation even in economies, such as America's, that are growing at reasonable rates. Worse, short-term interest rates are close to zero in many economies, so central banks cannot cut them to boost spending. The only ammunition comes from quantitative easing and other forms of printing money.

The global lowflation threat is a good reason for most central banks to keep monetary policy loose. It is also, in the longer term, a prompt to look at revising inflation targets a shade upwards. But the immediate problem is the euro area.

Continental Europe's economy has plenty of big underlying weaknesses, from poor demography to heavy debt and sclerotic labour markets. But it has also made enormous policy mistakes. France, Italy and Germany have all eschewed growth-enhancing structural reforms. The euro zone is particularly vulnerable to deflation because of Germany's insistence on too much fiscal austerity and the ECB's timidity. Even now, with economies contracting, Germany is still obsessed with deficit reduction for all governments, while its opposition to monetary easing has meant that the ECB, to the obvious despair of Mr Draghi, has done far less than other big central banks in terms of quantitative easing (notwithstanding this week's move to start buying "covered bonds").

If there was ever logic to this incrementalism, it has run out. As budgets shrink and the ECB struggles to convince people that it can stop prices slipping, a descent into deflation seems all too probable. Signs of stress are beginning to appear in both the markets and politics. Bond yields in Greece have risen sharply, as support for the left-wing Syriza party has surged (see article). France and Germany are trading rhetorical blows over a new budget proposal coming out of Paris.

Joining the bleedin' choir invisible

If Europe is to stop its economy getting worse, it will have to stop its self-destructive behaviour. The ECB needs to start buying sovereign bonds. Germany's chancellor, Angela Merkel, should allow France and Italy to slow the pace of their fiscal cuts; in return, those countries should accelerate structural reforms. Germany, which can borrow money at negative real interest rates, could spend more building infrastructure at home.

That would help, but not be enough. It is a bit like the early years of the euro debacle, before Mr Draghi's whatever-it-takes pledge, when half-solutions only fed the crisis. Something radical is needed. The hitch is that European law bans many textbook solutions, such as ECB purchases of newly issued government bonds. The best legal option is to couple a dramatic increase in infrastructure spending with bond-buying by the ECB. Thus the European Investment Bank could launch a big (say €300 billion, or $383 billion) expansion in investments such as faster cross-border rail links or more integrated electricity grids-and raise the money by issuing bonds, which the ECB could buy in the secondary market. Another possibility would be to redefine the EU's deficit rules to exclude investment spending, which would allow governments to run bigger deficits, again with the ECB providing a backstop.

Behind all this sits a problem of political will (see article). Mrs Merkel and the Germans seem prepared to take action only when the single currency is on the verge of catastrophe. Throughout Europe people are hurting-in Italy and Spain youth unemployment is above 40%. Voters vented their fury with the established order in the EU's parliamentary elections earlier this summer, and got very little change. Another descent into the abyss will test their patience. And once deflation has an economy in its jaws, it is very hard to shake off. Europe's leaders are running out of time.

# data[].attributes.attachment_link.description
THE world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan's economy is struggling and China's growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond.

# data[].attributes.body
Video Clip on Eurozone economy: Italy

# data[].attributes.attachment_link.readable_text
How did Italy become more sceptical about membership in the EU? FT Rome bureau chief James Politi visits Parma in northern Italy and asks students, shop owners, the mayor and business people about the matter.

Transcript

See our accessibility page for more information about transcripts

# data[].attributes.attachment_link.description
How did Italy become more sceptical about membership in the EU? FT Rome bureau chief James Politi visits Parma in northern Italy and asks students, shop owners, the mayor and business people about the matter. See our accessibility page for more information about transcripts

# data[].attributes.body
Videoclip on the Eurozone Economy

# data[].attributes.attachment_link.readable_text
The European Central Bank has jolted investors with a bold package designed to stimulate the eurozone's economy, cutting interest rates to a new low and expanding QE. FT economics editor Chris Giles talks to FT editor Lionel Barber about whether it will be enough.

Transcript

See our accessibility page for more information about transcripts

# data[].attributes.attachment_link.description
The European Central Bank has jolted investors with a bold package designed to stimulate the eurozone's economy, cutting interest rates to a new low and expanding QE. FT economics editor Chris Giles talks to FT editor Lionel Barber about whether it will be enough.

# data[].attributes.headline
Task 4: Based on the findings from Task 1,2 & 3, the group leader will evaluate and synthesize (similar to writing evaluative conclusion) whether the use of these policies will be effective in addressing these macroeconomic problems. 

# data[].attributes.subject
Task 4: Based on the findings from Task 1,2 & 3, the group leader will evaluate and synthesize (similar to writing evaluative conclusion) whether the use of these policies will be effective in addressing these macroeconomic problems. 

# data[].attributes.body
You may wish to use specific judging criteria to assess the suitability of these policies.

# data[].attributes.body
As an economic advisor (group leader), your role is to recommend and justify whether the use of policies have been effective in tackling recent macroeconomic problems faced by your country. Your job is to discuss with a panel of ministers (your team members) to do research and to propose solutions (policies) to solve these problems. Thereafter, you need to evaluate if the use of these policies  are effective or appropriate for your country.

# data[].attributes.body
Before commencing the activities (Task 1 to 4 below) spend 3 minutes to think of this question:

You may have some initial ideas about Eurozone economy. In just a few sentences, I want you to write what it is that you used to think about Eurozone economy. Take a minute to think back and then post your response in the following format:

“ I used to think that Europe is ..........................

Each of you must post your response in the space below this box.