(Solved): 2. The graph below shows the AD-AS diagram for Canada. What type of fiscal policy should th ...

2. The graph below shows the AD-AS diagram for Canada.

What type of fiscal policy should the government of Canada be implementing to bring the economy to the long-run equilibrium (select one)?

1. There is no need for either contractionary or expansionary fiscal policy.
2. The government should implement expansionary fiscal policy.
3. The government should implement contractionary fiscal policy.