The theory that supply creates its own demand in the macroeconomy is:
A) most closely associated with Keynesian economics.
B) the rule that was used to direct government spending to pull the U.S. economy out of the Great Depression.
C) an assumption that underlies the classical economic position that an economy automatically moves to full employment.
D) all of the above.

Question

Quizplus · Accepted Answer

The theory that supply creates its own demand is a principle of classical economics, known as Say's Law. It suggests that the production of goods and services (supply) will inherently create a demand for those goods and services, leading to an automatic adjustment towards full employment in the economy. This contrasts with Keynesian economics, which argues that demand can falter, leading to periods of unemployment that require government intervention to correct.

The Theory That Supply Creates Its Own Demand in the Macroeconomy