In an economy, the current output (real GDP) is currently below potential GDP.

(i)What type of fiscal policy should the government try to get to potential GDP? Draw an AD-AS diagram to illustrate this situation (including the initial situation). Explain the figure in some detail. State what components of the AD and AS curves are changing (if any), and in which direction.

(ii)Can the existence of a fiscal multiplier help the government in terms of its commitments to reach potential GDP level of output? Provide an example.