The term market failure refers to
a. a situation in which the market on its own fails to allocate resources efficiently.
b. an unsuccessful advertising campaign which reduces demand for a product.
c. a situation in which competition among firms becomes ruthless.
d. a firm that is forced out of business because of losses.
a
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If expectations are formed rationally, wages and prices are not completely flexible in the short run, and policy is correctly anticipated, increases in aggregate demand will stimulate the economy to higher levels of Real GDP and lower levels of unemployment in
A) the short run or the long run. B) neither the short run nor the long run. C) the short run, but not in the long run. D) the long run, but in not the short run.
How much does the money supply change if the reserve requirement rate is 20% and excess reserves are $5 million?
a. $50 million b. $1 million c. $10 million d. $25 million