A coordination failure
A) is a real-business-cycle event.
B) is a self-fulﬁlling prophesy.
C) results from the spending-income multiplier.
D) is a direct outcome of inappropriate ﬁscal policy.

Question

Quizplus · Accepted Answer

A coordination failure occurs when individuals or firms fail to coordinate their actions in a way that would lead to a mutually beneficial outcome. This can be due to various reasons, such as incomplete information or lack of trust. In such situations, the outcome can be self-fulfilling, meaning that the failure of coordination becomes a reality because individuals or firms anticipate that others will not cooperate.

A Coordination Failure