Question

When most consumers and firms reduce spending only because they expect other consumers and firms
to reduce spending, and a recession results,
A. a self-correction has occurred.
B. an adverse aggregate supply shock has occurred.
C. a coordination failure has occurred.
D. a real-business-downturn has occurred.

I believe my answer is B

Answer 1

Give the answer B, and it will be marked wrong. What is a coordination failure?

Answer 2

A situation in which do not reach a mutually beneficial outcome because they lack some way to jointly coordinate their actions; a possible cause of macroeconomics instability.