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

Question

Want to see more full solutions like this?

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’.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Thanks in advance!

I need help figuring this out. I'm pretty sure this is correct?If Zambia is open to international trade in oranges without any restrictions, it will import 180 tons of oranges.I can't figure these two out: 1) Suppose the Zambian government wants to reduce imports to exactly 60 tons of oranges to help domestic producers. A tariff of ???? per ton will achieve this. 2) A tariff set at this level would raise ????in revenue for the Zambian government.

16:10 ← BEC 3701 - Assignments-... KWAME NKRUMAH UNIVERSITY TEACHING FOR EXCELLENCE SCHOOL OF BUSINESS STUDIES DEPARTMENT OF ECONOMICS AND FINANCE ADVANCED MICRO-ECONOMICS (BEC 3701) Assignments INSTRUCTIONS: Check instructions below: LTE 1) Let u(q1,q2) = ln q₁ + q2 be the (direct) utility function, where q₁ and q2the two goods. Denote P₁ and P2 as the prices of those two goods and let M be per period money income. Derive each of the following: a) the ordinary or Marshallian demand functions q₁ = d₂ (P₁, P₂, M) for i = 1,2 [3 Marks] b) the compensated or Hicksian demand functions q₁ = h₂ (P₁, P2, M) for i = 1,2 [3 Marks] c) the Indirect Utility Function uº = v(P₁, P2, M) [3 Marks] d) the Expenditure Function E(P1, P2, U°) [3 Marks] e) Draw a diagram of the solution. There should be two graphs, one above the other; the first containing the indifference curves and budget constraint that characterize the solution to the consumer's choice problem; the second characterizing the demand…

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’.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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’.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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’.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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’.