As an expert macroeconomist, you have been hired by the federal government to act as a consultant and aid with a national economic situation. The economy is currently facing an inflationary gap.

a) The federal government would like you to provide two fiscal policy solutions that would shift the short run aggregate demand curve and bring about a long run equilibrium. Using the economic knowledge from this course, provide the two policy solutions that you would suggest and explain how they would close the inflationary gap. (6 Marks = 2 Marks for policies and 4 Marks for explanation)

b) The Bank of Canada would like you to provide two monetary policy solutions that would shift the short run aggregate demand curve and bring about a long run equilibrium. Using the economic knowledge from this course, provide the two policy solutions that you would suggest and explain how they would close the inflationary gap. (6 Marks = 2 Marks for policies and 4 Marks for explanation)

c) Name and describe 2 negative economic or negative social consequences which may occur as a result of these policies. Note: You may provide 1 negative economic consequence and 1 negative social consequence if you like. (4 Marks = 2 Marks each)