0.99 pts Question 21 IMAGINE: The most recent economic data show that GDP is dropping, unemployment is rising, and the price level is dropping. Which of the following could you advise the President and Congress to do to return the economy to its long-run equilibrium? You should assume the real world is Keynesian in the short run The government should lower taxes on income to stimulate consumer spending The government should increase spending on public works programs The government should raise taxes on capital gains The government should do nothing. Changes in fiscal policy will only change inflation, not real GDP. The government should increase military spending . Question 22 0.92 pts Dr. Watson suspects that the SRAS curve is flatter in Europe than in the US. Why might that be? Europeans are more aware of inflation than Americans. EU governments are more likely to pass laws that set prices than in the US. Therefore prices will be more sticky. Unions are stronger in the EU and they will ensure that wages do not go down if AD drops Many EU nations have unemployment rates twice as high as those in America. That means their firms have more workers to choose from, so they can increase production without needing to increase wages