5. This problem is meant to illustrate how the effects of changes in fiscal policy depend upon what happens to monetary policy. The solid lines in the figure show and economy in an initial position of equilibrium at full employment with a balanced budget, low interestrates, and no trade deficit, i.e., exports equal imports. The dashed line shows the same economy flowing a decrease in personal income taxes. Assume the decrease in taxes is equal to $1-billion at the full-employment level of income. Aggregate Aggregate Demand Supply Price Level Full Employment Real GDP a. Assume the monetary authority wants to avoid the inflation that would be associated with the increase in the structural deficit. Should the monetary authority engage in an open market purchase or sale? Why? b. Assume the monetary authority is successful in offsetting the expansionary impact of the increase in the structural deficit. That is, open market operations are successful in shifting the aggregate demand curve back to its initial position. Initially the economy was at full employment with no inflation, a balanced budget, low interest rates, and no trade deficit. Call this outcome Option A. Now the economy is again at full employment with no inflation, but with a structural deficit and high interest rates. Call this outcome Option B. What different does it make whether the economy is at full employment under Option A or Option B