One Potential Weakness of the Coordination Failure Model as an Explanation

question 20

Multiple Choice

One potential weakness of the coordination failure model as an explanation of business cycles is that

• A) government policy is unpredictable.
• B) consumer behaviour is rational and predictable.
• C) that underlying shocks that cause business cycles are expectations which are essentially unobservable.
• D) money supply shocks are predictable.
• E) there are fluctuations between "good" and "bad" equilibria.

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Definitions:

Utilitarianism

A moral theory suggesting that the best action is the one that maximizes overall happiness or pleasure for the greatest number of people.

Quantification

The process of measuring or expressing something as a quantity, especially for the purpose of analysis or comparison.

Primary Tool

The main instrument or device used to accomplish a task or achieve a goal.

Market Value Ethics

A principle that considers ethical actions in the marketplace as those that maximize the value for all stakeholders involved.