A coordination failure occurs when
A)production on a factory floor is disorganized
B)customers regularly trip over loose welcome mats at stores
C)employers and employees fail to reach an agreement to increase nominal wages,employment,and an expansionary gap
D)an economy is at full employment
E)employers and employees fail to reach an agreement to reduce nominal wages,unemployment,and a contractionary gap

Question

Quizplus · Accepted Answer

A coordination failure occurs when employers and employees fail to reach an agreement to reduce nominal wages, which then leads to unemployment and a contractionary gap. This failure to coordinate can lead to economic inefficiency, as resources are not being used to their fullest potential.

A Coordination Failure Occurs When