Financing the substantial budget deficits by borrowing

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Reference no: EM13771001

In 2011, the government of Greece ran into severe financial difficulties. For years, the Greek government had spent much more than it had received in tax revenue, financing the substantial budget deficits by borrowing. If Greece had had its own currency, rather than being part of the euro area, how could that help Greece solve the problem? (Make sure you state your intuition)

Hint: Using Open Economy

Reference no: EM13771001

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