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Say’s law of MARKET
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INRODUCTION Say’s law of market states that supply creates its on demand which means AD=AS
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Define J.B. Say,’ Supply creates its own demand.”
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Assumptions Flexible prices Money – a veil No hoarding
State is neutral Perfect competition Long period Production according to consumer preference Supply of labour and capital is perfectly elastic
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Explanation Say’s law and barter economy
Say’s law and monetary economy
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Implications General over-production is impossible
General unemployment is impossible Automatic adjustment Equality b/w saving and inv. Money is but a veil Partial over production and partial unemployment are possible Policy implication ( Free Economy)
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