FIGURE 6 FISCAL POLICY AND AGGREGATE SUPPLY
The ultimate goal of fiscal policy directed at aggregate supply is to shift the long-run aggregate supply curve from LRAS0 to LRAS1. This moves the economy’s full employment equilibrium from point a to point b, expanding output from Q0 to Q1 while keeping inflation in check. With these fiscal policies, inflationary pressures are reduced as output expands, but these policies take a longer time to have an impact.