Of the options given, the correct answer for the first sentence would be option A: “racial”. And the correct answer for the second sentence would be option B: “identity”. The completed sentences would be:
He is speaking about the racial injustices present in American society. As these injustices have changed over time, the American identity has also shifted. Those changes are, in turn, reflected in American literature.
The reason “racial! is the first answer is because in the excerpt, the author speaks of injustices that happened to people because of the color of their skin, they were not casual or internal only, therefore options B and C are incorrect.
And the reason “identity” is the second answer is because these injustices maid the American society change its way of thinking and acting, therefore, changing its identity, not merely their responses or their focus.