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 economic agents fail to coordinate their actions, leading to suboptimal outcomes. It is often described as a self-fulfilling prophecy because the expectations of economic agents can lead to an equilibrium that reinforces those expectations, even if it is inefficient.

A Coordination Failure