Which of the following statements is inconsistent with Say's Law?
A) The economy has flexible wages and prices.
B) The economy will produces at the full employment level of output.
C) The economy has an environment of "laissez faire."
D) The economy's level of saving depends solely on the level of income.

Question

Quizplus · Accepted Answer

Say's Law states that supply creates its own demand, meaning that the act of producing goods and services generates income that is then used to purchase other goods and services. This is inconsistent with statement D, which implies that saving decisions are not influenced by income levels and therefore could lead to insufficient aggregate demand in the economy.

Which of the Following Statements Is Inconsistent with Say's Law