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Which of the following statements would be inconsistent with Say's law? a

Economics Dec 08, 2020

Which of the following statements would be inconsistent with Say's law?

a. The best way to foster an economy is through government stimulus spending.

b. A given value of supply must create an equivalent value of demand in the economy.

c. The economy has flexible prices and wages.

Expert Solution

The inconsistent statement is a. The best way to foster an economy is through government stimulus spending.

Say's law was introduced by Jean-Baptiste Say. This law emphasizes the force of the supply in the market. Say's law states that the supply creates its demand. In other words, an increase in the production of product X will provoke and increase in income. This increase in income will be partially shared with workers who will use part of this additional income in the purchase of product X. Therefore, this law based its framework on an economy with flexible wages. On the other hand, this law does not include government spending as a way to promote economic growth.

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