Market failure can occur even when the price signals are accurate.
Answer the following statement true (T) or false (F)
True
The market may fail even when the price signals are accurate. The response to price signals, rather than the signals themselves, may be flawed. For example, there may be externalities present.
Economics
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If the rate of inflation in the economy is steady at 5 percent per year, how does the short-run Phillips curve predict that the unemployment rate will be changing, if at all? Does your answer change if inflation in the economy is 0 percent?
Illustrate your answer with a Phillips curve.
Economics
Why did the interest rate volatility of the 1970s spur financial innovation?
What will be an ideal response?
Economics