In the AS/AD Framework, the Financial Friction Appears as A

question 70

Multiple Choice

In the AS/AD framework, the financial friction appears as a:

• A) negative demand shock.
• B) negative supply shock.
• C) change in the long-run real interest rate.
• D) positive supply shock.
• E) The financial friction is only present in the IS/MP model.

---

Definitions:

Unfit Seed

Seeds that are unsuitable for planting due to poor quality, contamination, or being genetically modified without approval.

Lost Profits

Damages recoverable in a lawsuit, representing the amount of profit one party would have made had the other party not breached a contract or committed a wrongful act.

Replacement Seed

relates to seeds provided to replace initial batches that were defective or failed to germinate, ensuring agricultural productivity is not compromised.

Specific Performance

A legal remedy in contracts requiring the party who breached the contract to perform their contractual obligations, rather than simply paying damages.