Question: The accompanying diagram shows the current macroeconomic situation for the economy of Brittania; real GDP is Y1, and the aggregate price level is P1. You have been hired as an economic consultant to help the economy move to potential output, YP
![1522_SRAS.png](https://secure.tutorsglobe.com/CMSImages/1522_SRAS.png)
a. Is Brittania facing a recessionary or inflationary gap?
b. Which type of fiscal policy-expansionary or contractionary-would move the economy of Brittania to potential output, YP? What are some examples of such policies?
c. Illustrate the macroeconomic situation in Brittania with a diagram after the successful fiscal policy has been implemented.