Walras’s law is derived from the budget constraints of all the economic agents in the economy. Can Say’s law be similarly derived from budget constraints? Use the relevant constraints and specify the additional assumptions needed for this derivation. Assess the validity of these assumptions.

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Q: increase real GDP in the short run, but not the long run.

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A: The following problem has been answered as follows:

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Q: In the model SIM of chapter 3 of the book of Godley, Wynne, and Marc Lavoie. 2012. Monetary…

A: In the SIM model of chapter 3, an increase in government expenditure (G) leads to an increase in…