Show how an decrease in income tax will close a deflationary gap

Initially the economy is in equilibrium where AD=SRAS and real output y1 is produced at P. A deflationary gap is when potential output is below real output so as this is the case we have a deflationary gap. A decrease in income tax means the cost of borrowing is cheaper, and therefore people will want to buy more. Therefore there is an increase in consumption. As consumption makes up AD (aggregate demand), there is an increase in AD, shifting the AD curve from y1 to yf (full employment level, assuming Keynesian Curve is used).now the economy is at equilibrium where AD1=LRAS and real output yf is produced at P1. The deflationary gap has now been closed.