Say's Law and Overproduction of Goods and Services | CFA® Level 1 Exam Prep

Say's Law and Overproduction of Goods and Services

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Question

According to Say's law, there cannot be overproduction of goods and services because

Answers

A. overproduction will lead to higher unemployment, which will reduce production.

B. demand creates its own supply.

C. less fortunate countries will always buy the excess output.

D. producing goods generates enough income to buy the total output.

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Explanations

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A. B. C. D.

Say's Law is the view that production creates its own demand. Demand will always be sufficient to purchase the goods produced because the income payments to the resource suppliers will equal the value of the goods produced.

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