Question

What caused debt problems in such countries as Spain, Italy, and Greece?

A. The other Eurozone members made these countries switch currencies from the euro back to their original national currencies.

B. Because their economies weakened, it became more costly for these countries to borrow additional money to keep their governments operating.

C.The governments of Spain, Italy, and Greece had to pay for expenses such as employees’ salaries and pensions and many public services.

D.The governments of Spain, Italy, and Greece had to borrow money by selling bonds that have to be paid back to investors with interest.

Answer 1

B) Because their economies weakened, it became more costly for these countries to borrow additional money to keep their government operating.

Spain, Italy, and Greece have been spending more on public services than they have been raising in their tax revenues. The three countries have fueled their society on much money borrowing that they have no money to pay back. However, other Europe countries say that they will only help if these countries change their fundamental tax imbalance.