Question

1.) According to Say’s law, a given value of supply must create

Select the correct answer below:

an abundance of wealth for the economy's agents

further increases in the supply of the inputs to production

a decrease in the demand for the product

an equivalent value of demand somewhere else in the economy

2.)

Keynes' law is

Select all that apply:

the opposite of Say's law

the same as Say's law

consistent with the statement that supply creates demand

described by the statement that a lack of demand in the economy as a whole leads to inadequate incentives for firms to produce

3.)

The Short-run Aggregate supply (AS) is

Select the correct answer below:

vertical at the potential level of GDP

horizontal at the right price level

downward sloping

upward sloping

Answer 1

a) "D"

Supply will create its own demand and that will be equal to the amount produced in the market.

b) "D"

described by the statement that a lack of demand in the economy as a whole leads to inadequate incentives for firms to produce

c) "D"

The SRAS is upward sloping in the market because as the firm has to increase the output they will have to increase the price.