Which of the following offers theories to explain why the government, like the private sector, may also "fail"?

According to classical macroeconomic theory, changes in the money supply affect

a. nominal variables and real variables. b. nominal variables, but not real variables. c. real variables, but not nominal variables. d. neither nominal nor real variables.

Flowers are more expensive on Valentine's Day than at other times of the year, yet sales of flowers are highest on that day. How does economic theory account for this?

A. Florists know that there are no substitutes for flowers, so they take advantage of consumers on Valentine's Day. B. Flowers are not subject to the law of demand C. People buying the flowers are irrational. D. An increase in demand pushes up the market clearing price of flowers.