Market failure occurs when
a. an optimal allocation of society's resources is not achieved
b. negative externalities are taken into consideration
c. positive externalities are taken into consideration
d. government failure is at its worst
e. all social costs are included in the prices of goods and services
A
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When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent
a. What is the cross elasticity of demand between these two goods? b. How are these goods related? c. If the price of bananas rises, how will that affect the demand curve for peanut butter?
The gap between potential GDP and real GDP had been as large as 7 percent during the worst of the 2007-2009 recession. By 2015, the gap
A) was positive, with real GDP exceeding potential GDP. B) had been eliminated. C) remained at 7 percent. D) was still nearly 3 percent.
Rational expectations theory rejects the concept that only unanticipated or surprise policies can influence inflation
a. True b. False Indicate whether the statement is true or false
The classical view of the demand for money incorporated a more complex set of motivations than the Keynesian view
Indicate whether the statement is true or false