Suppose, due to a recession the current level of production in the US is below the Potential GDP curve (LRAS). Suppose you note how the economy is not producing at the most efficient level and that you have the ability to impose a fiscal policy in the economy. What type of fiscal policy would you introduce? Describe, in the same chart, the expected impact of your policy on the US economy! Assume all shocks are unanticipated, and other things are constant.

Market of All Goods and Services, US Price LRAS index SRAS, P1 AD1 Roal GOP Y YF