One Potential Weakness of the Coordination Failure Model as an Explanation

question 2

Multiple Choice

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

• A) evidence supporting intertemporal substitution as an important determinant of labor supply is weak.
• B) evidence supporting the existence of increasing returns at the aggregate level is weak.
• C) it fails to explain several of the key business cycle regularities.
• D) it requires that consumers not behave in a rational manner.

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Definitions:

Abnormal Behaviour

Actions or behaviors that deviate significantly from what is considered typical or normal by society.

Neurotransmitters

Chemical substances that transmit signals across a synapse from one neuron to another in the nervous system.

Neuronal Damage

Injury to neurons, the nerve cells in the brain and nervous system, which can result from trauma, toxins, or disease.

Current Theories

The most recent and widely accepted explanations or models in a particular field of study.