Assume that Pisto economy is currently experiencing economic growth problems and policy makers are looking for appropriate policies that can lift the economy. The Pistorians are following fixed exchange rate system and due to international restrictions, there capital is immobile. Suppose you are a policy maker and the government approaches you to decide on the best policy for the Pistorian economy. The government is very keen on increasing government expenditure in the economy. You advise to the government with best explanations from the graph given below that whether an increase in government expenditure will stimulate a higher level of output.

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