Followers of J.B. Say and J.M. Keynes agree that money harms the loanable funds market.

Question

Quizplus · Accepted Answer

Followers of J.B. Say believe in Say's Law, which states that supply creates its own demand and therefore there is no possibility of a general glut in the economy. They believe that saving creates investment and that money is neutral. On the other hand, followers of J.M. Keynes believe that money can have a significant impact on the loanable funds market and the overall economy, and that government intervention may be necessary to stabilize the economy during periods of recession or unemployment.