Say’s law states :-
‘’ Production is the source of Demand ‘’
When an individual manufacture goods and services , he get paid for that goods and services which he produced and from that pay , he can demand other goods and services .
From the above statement it can be derived :
‘’ Supply creates its own demand ‘’
It means that supply of goods lead to sufficient income to create demand for goods equal to its supply . Say’s further states that a produced good constitute demand for other goods and not for itself .
The argument over Say’s theory is closely analogous with the concept of Glut , i.e. overproduction .
In this context , JB says that supply of a commodity which is not in demand does not compose ‘’Real Demand ‘’ . He also proposed , overproduction of a commodity is in reality the underproduction of other commodities . Say eventually acknowledged overproduction of a product by describing Glut as the condition prevailing where the cost of producing a product is greater than the purchasing power of that product .
John Maynard Keynes outlined unemployment as a Glut of Labourers , as the Say’s law asserted that glut of labour could not exist . In the reaction , there were various controversies arguing that there is ‘’natural rate of unemployment’’ – challenging Keyne’s assumptions .
Gluts are not the cause of recession but they are the result of recession . When an
Economy is in Recession there is unemployment and misallocation of resources
which directly results in accumulation of goods .
When business activities slows down as a result of recession , sales drop and inventories a...
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...echnology can transcribe to epidemic growth in any society that is not hampered by bandits , regulators or central bankers. By their control in the money supply & interest rates , central bankers have not only stimulated economically destructive boom & bust cycles, but have created the poisonous mirage that "too much economic growth" is inflationary and unsustainable.
Understanding economic growth and how to facilitate it , is the most important concern in economics. Upgrading the materialistic conditions of mankind results in making everyone richer — rich, middle-class and poor. Charity to the needy, better education, better health, a clean and green environment, elimination of war & terror , taking steps to banish corruption , advances in science and technology , culture and time for more leisure activities are the fruits of economic growth & wealth creation.
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