The economy of Andersonville is currently performing at the full-employment level of output with an inflation rate of 2 percent, a natural rate of unemployment at 5 percent, and a nominal interest rate of 7 percent.

Assume that the Andersonville government targets an unemployment rate of 3 percent.

i. What discretionary fiscal policy measure could be implemented to achieve this lower unemployment rate? Explain the measures' effect on aggregate demand.

ii. On your graph of the Phillips Curve from part (a),show the effect of the discretionary policy measures in the short-run. Label this point B.