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.