Statement 1 says that a market economy is naturally unstable, so the government has to help stabilise it by using monetary policy and fiscal policy. Statement 2 says that the economy will always move back to its equilibrium level of output and unemployment, and therefore long-run aggregate supply is vertical. Which row correctly matches these statements to Keynesian and Monetarist theories?
- Astatement 1: Keynesian; statement 2: Keynesian
- Bstatement 1: Keynesian; statement 2: Monetarist
- Cstatement 1: Monetarist; statement 2: Keynesian
- Dstatement 1: Monetarist; statement 2: Monetarist