Figure 26-11 -Refer to Figure 26-11. in the Dynamic Model of AD-AS

question 194

Multiple Choice

Figure 26-11
-Refer to Figure 26-11. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues no policy, then at point B

• A) there is pressure on wages and prices to rise.
• B) the unemployment rate is very, very low.
• C) firms are operating above their normal capacity.
• D) the economy is below full employment.

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Definitions:

Material Breach

A significant violation of a contract's terms, which undermines the agreement's fundamental purpose and provides grounds for legal action.

Quasi-contract

An obligation imposed by law to prevent unjust enrichment, even in the absence of a formal contract.

Economic Harm

Refers to financial loss or damage suffered by a person or entity, often as a result of wrongful actions of another.

Implied-in-fact Condition

A legal term for a provision that, although not expressly stated, is presumed to be a part of an agreement based on the actions or circumstances of the parties.