Refer to the diagram, in which Q f is the full-employment output. If aggregate demand curve AD 1 describes the current situation, appropriate fiscal policy would be to:

A.  increase taxes and reduce government spending to shift the aggregate demand curve
rightward to AD 2 .
B.  reduce taxes on businesses to shift the aggregate supply curve leftward.
C.  reduce taxes and increase government spending to shift the aggregate demand curve from AD 1 to AD 2 .
D.  do nothing since the economy appears to be achieving full-employment real GDP.