1. a. What is fiscal policy? What kind of fiscal policy is needed to reduce unemployment problem? b. What is monetary policy? What kind of monetary policy is needed to fight inflation problem? 2. Write an essay on debt and deficit and include answers to the following in your essay: a. What is budget deficit and how is it related to Government debt? b. What is cyclical adjustment to deficit and how does it help to understand the stance of fiscal policy? c. What is crowding out? How does budget deficit crowd out investment? d. Why is a high level of government debt is a matter of concern?