Explain what is meant by the term coordination failure and provide an example
What will be an ideal response?
This is a state of affairs in which agents are unable to coordinate their efforts, and hence end up in an equilibrium that leaves them worse off than they would be if they were able to coordinate. There are several examples offered in the text, or the students may come up with their own.
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If the real interest rate increases, there is
A) an upward shift of the consumption function. B) a movement downward along consumption function. C) a change in the slope of the consumption function. D) a movement upward along the consumption function. E) a downward shift of the consumption function.
The typical relationship between a worker's productivity and the worker's wage rate is
A) high productivity workers receive low wage rates. B) low productivity workers receive low wage rates. C) no link between productivity and wages earned. D) high productivity workers find that their jobs are often outsourced. E) that workers with high productivity need to have their high wages protected by tariffs.
In the market for oranges, the demand and supply of oranges decrease by the same amount. The equilibrium quantity will ________ and the equilibrium price will ________
A) decrease; not change B) decrease; fall C) remain the same; either rise or fall D) remain the same; rise
Which of the following statements best describes the US economy between 1921 and 1928?
a. Most of the major sectors were growing very rapidly b. Hyperinflation led to large decreases in the standard of living c. Real average wage growth was stagnant d. Unemployment fluctuated dramatically