In the coordination failure model,
A) money supply rises.
B) money is not neutral.
C) money is neutral.
D) money is dictated by politics.
E) money supply is unpredictable.

Question

Quizplus · Accepted Answer

In the coordination failure model, money is neutral, meaning that changes in the money supply do not affect the real economy in the long run. The model focuses on how coordination failures can lead to suboptimal outcomes, such as unemployment or inflation, but these outcomes are not due to changes in the money supply.

In the Coordination Failure Model