Use the Following to Answer Questions

question 7

Multiple Choice

Use the following to answer questions:
-(Figure: Fiscal Policy Choices) Refer to Figure: Fiscal Policy Choices. In panel (a) , the economy is initially at output level Y₁ and there is:

• A) an inflationary gap.
• B) a recessionary gap.
• C) equilibrium at full employment.
• D) no gap.

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Definitions:

Equal Dignities Rule

The legal rule that provides that when a party appoints an agent to negotiate an agreement that must be in writing, the appointment of the agent must also be in writing.

Consideration

In contract law, something of value exchanged between parties that is required for the formation of a legal contract.

Assignment

The transfer of a contract right from one person to another.

Frustration of Purpose

A legal defense allowing parties to terminate a contract when an unforeseen event undermines the contract's principal purpose, rendering it impossible to fulfill.