k. Consider a level of potential output that is above a typical equilibrium of this economy. If you were to advise the government on proper scal policy, what sort of policy would you advise? 1. Assume that the policy you recommend is implemented by the government. Clearly and precisely explain every effect of this policy and the mechanisms that will result in a change in equilibrium real GDP in this economy. How would this policy affect the price level? Graphically show all the changes in the model. m. What happens to the ultimate impact of the policy you advise in previous part if while the policy is implemented the cost of labour increases for all rms due to exogenous reasons? Can you determine whether the effects on equilibrium real GDP or equilibrium price level are certain? If not certain, what do they depend on? Clearly explain