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Give an Example of an External Failure

question 289

Essay

Give an example of an external failure.


Definitions:

Inflation

The speed at which the overall price level for goods and services increases, thereby diminishing the buying power.

Shoeleather Costs

The resources wasted when inflation encourages people to reduce their money holdings.

Money Holdings

The amount of cash or liquid assets that a person or entity possesses at any given time.

Money Supply

The whole amount of money resources available in an economy at a given interval.

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