Question

According to Say's law, a. if there is demand for a good, someone will supply it. b. supply creates demand sufficient to purchase all goods and services produced. c. supply and demand work together to determine price. d. trading takes longer in a barter economy than in a money economy. e. none of the above

Answer 1

Answer: b. supply creates demand sufficient to purchase all goods and services produced.

Explanation: According to Say's law, supply creates demand sufficient to purchase all goods and services produced. In simpler terms, it states that supply creates its own demand and that ability to purchase something depends on the ability to produce and thereby generate income. There can therefore neither be a general underproduction nor a general overproduction of goods and services--when an individual produces a particular good, he also plans to demand some other goods. Say's law addresses how a society creates wealth and the nature of its economic activity.