Say's Law is the idea that A. in the long run, the economy reaches full employment automatically B. the aggregate production function, along with the labor market, determines the economy's level of output C. total output will always exceed total spending D. whenever a good or service is produced, an equal amount of income is created E. markets always clear

Question

Business

Esteban Choi

9 August, 05:17

Say's Law is the idea that A. in the long run, the economy reaches full employment automatically B. the aggregate production function, along with the labor market, determines the economy's level of output C. total output will always exceed total spending D. whenever a good or service is produced, an equal amount of income is created E. markets always clear

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Answers (1)

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Savanah Wolfe · Answer 1

The correct answer is the option A: in the long run, the economy reaches full employment automatically.

Explanation:

To begin with, the concept of ''Say's Law'' is a classical economic theory created by Jean-Baptiste Say whose main purpose was to establish the fact that the production of a good creates the demand of another product and that is due to the fact that if a producer sells its productions then he will use all the money earned in the purchase of another goods. Moreover, Say's Law has been one of the principal doctrines used in order to support the idea of the laissez-faire belief that a capitalist economy will naturally tend toward full employment at the long run without the regulation that a government can provide.