1.If the full employment rate of output for a nation is $15 trillion and short-run equilibrium output is $13 trillion, what course of fiscal policy action might a Keynesian economist recommend in order to return the economy to full employment levels of output?

a. Decrease government spending and taxes

b. Buy government securities on the open market

c. Increase government spending while holding taxes constant

d. Raise the reserve ratio

e. Keep government spending constant while increasing taxes.

2.Monetarist theory attributes inflation to

a. increases in government spending

b. too much money being created

c. decreases in taxes

d. consumer expectations of future policy changes

e. a lack of federal oversight in the banking industry.