In periods of relatively high levels of unemployment, a classical economist would advocate which of the following governmental policies to move the economy toward full employment?

When the Fed buys U.S. government securities, the money supply

A) increases because there is an increase in transaction deposits at the bank of the bond dealer but there is no decrease in transaction deposits at any other bank. B) decreases because there is an increase in the reserves of the bond dealer's bank. C) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a reduction in transaction deposits at the Fed. D) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a fall in transaction deposits at another bank.

The economy is in a recessionary gap and there is complete crowding out. Furthermore, there is no evidence that the economy is in a liquidity trap or that investment is interest-insensitive. This makes the case for the use of __________ policy stronger than it might be otherwise

A) contractionary monetary B) contractionary fiscal C) expansionary fiscal D) expansionary monetary