Question

Which of the following explain how classical economists argued that Say's law holds? Check all that apply. Although there may be temporary unemployment caused by short periods in which wages and prices adjust, in the long run, aggregate production creates aggregate income that, in turn, allows people to purchase the goods and services being produced. Demand can be forever inadequate for an economy to reach full employment. Markets eliminate persistent shortages and surpluses. Grade It Now Save & Continue Continue without saving

Answer 1

Ans:

Although there may be temporary unempolyment caused by short periods in which wages and price adjust, in the long run production creates aggregate income that in turn, allows people to purchase the goods and services being produced.

Markets eliminate persistents shortages and surpluses.

Explanation:

Say's law states that supply creates its own demand. In the short run , wages and price may not adjust easily but in the long run there is sufficient time for the adjustment of wages and price. It also says that whatever produced that will be consumed in the longrun.