Say's law states that the total amount paid out for resources (factors of production) must equal the value of the goods produced. In other words, production creates its own demand, as individuals producing goods and services will use the income they earn to purchase other goods and services. This is also known as the law of markets or the law of supply and demand.

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Say's Law

Question 45

Multiple Choice

Say's law

A) states that the total amount paid out for resources must equal the value of the goods produced.
B) states that all income spent must have been earned.
C) is the intellectual basis for the Keynesian model of income and employment.
D) is an integral part of the Marxian analysis of capitalism.
E) requires the assumption of wage and price rigidity.

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