The rational expectations theory claims that workers and firms will not make systematic errors when they forecast inflation

If the incentive to take advantage of a conflict of interest is high

A) removing the economies of scope that created the conflict may induce higher costs because of the decrease in the flow of reliable information. B) then the government must step in to remove the conflict. C) the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict. D) firms will always step in and work to remove the conflict.

A situation in which a market economy leads to too few or too many resources going to a particular economic activity is known as

A) competition. B) excessive competition. C) destructive competition. D) a market failure.