Validity of Say’s law and long-term unemployment according to classical economists.

Question

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Answer 1

Question

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

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Answer 2

Question

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

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Answer 3

Question

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

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Answer 4

Question

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

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Answer 5

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

Answer 6

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

Answer 7

Chapter 8, Problem 1SQP

To determine

Validity of Say’s law and long-term unemployment according to classical economists.

Answer 8

Expert Solution & Answer

Explanation of Solution

The classical economists believe in price-wage flexibility. They state that underemployment and under consumption will not co-exist in the economy in the long run. When products are unsold in the market, it creates a surplus and this would induce the firms to reduce the price of the products. When the price reduces, it implies that the wage rate also decreases and the unemployed people would be willing to work at a lower wage rate. This implies that under consumption lead to an increase in the employment and a decrease in the rate of unemployment. Say’s law is valid as the price-wage flexibility facilitates the notion ‘supply creates its own demand’.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 8.4 - Prob. 1YTE Ch. 8 - Prob. 1SQP Ch. 8 - Prob. 2SQP Ch. 8 - Prob. 3SQP Ch. 8 - Prob. 4SQP Ch. 8 - Prob. 5SQP Ch. 8 - Prob. 6SQP Ch. 8 - Prob. 7SQP Ch. 8 - Prob. 8SQP Ch. 8 - Prob. 9SQP

Validity of Say’s law and long-term unemployment according to classical economists.

Validity of Say’s law and long-term unemployment according to classical economists.

Explanation of Solution

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