A demerit good is a good that __________

If recessions are in large part the consequence of coordination failures,

A) government must direct or control private spending to reduce instability. B) stability cannot be achieved without the use of discretionary fiscal policy. C) stability cannot be achieved without the use of discretionary monetary policy. D) the economy is unlikely to respond smoothly and predictably to shifts in government policy.

In a model with money neutrality, a 10% increase in the money supply leads to an increase of prices by

A) more than 10%. B) 10%. C) less than 10%, but more than zero. D) zero.