Explain the says law, Macroeconomics

Assignment Help:

Q. Explain the Says Law?

GDP, and Say's Law

Aggregate supply

YS = f(L, K) in the classical model where L is concluded in the labor market while K is exogenous

Aggregate supply YS is stated as the amount of finished services and goods firms in a country will want to sell under given conditions. In the classical model aggregate supply is concluded by production function, YS = f (L, K). 

The amount of capital in classical model is an exogenous variable; it isn't determined within the model though presumed to be given. However we typically presume that K is constant - which is reasonable in the short run - it need not to be constant. K may increase over time though we should know K at any point in time. 

Amount of labor, though, is an endogenous variable which is determined in the labor market. This concludes that YS is determined completely by the labor market in classical model. The below chart explains. 

1299_Explain the Says Law.png

Figure: Determination of aggregate supply


Related Discussions:- Explain the says law

Interest rate effect, Could you explain the "interest rate effect" in terms...

Could you explain the "interest rate effect" in terms of the slope of a curve?

Rate of inflation, 2. Given the following information: Consumers are very o...

2. Given the following information: Consumers are very optimistic about the future. The price of oil has just doubled. The money supply is growing at a 6% rate. The government has

Why are economic models uses for trade-offs and trade, Why are Economic Mod...

Why are Economic Models uses for Trade-offs and Trade? Simplified representations of actuality a. production possibility frontier b. comparative advantage c. circular-

Expected cost of building the boat, Half the members of a fishing tribe cat...

Half the members of a fishing tribe catch four fish per day and half catch 10 fish per day. A group of 10 members could build a boat for another tribe in one day and receive a paym

The income tax rate is reduced, If income falls below its potential and the...

If income falls below its potential and the income tax rate is reduced, this will: A. raise the passive deficit but reduce the structural deficit. B. raise both the passive and str

Ricardian model, a) There is a general trade, and sometimes prominent as in...

a) There is a general trade, and sometimes prominent as in case of UK, Canada, and Europe. When the tariff rates are showing an upward trend, the trade/GDP ratio is either declinin

Assignment help, Consider the economic data for Country A: Unemployment lev...

Consider the economic data for Country A: Unemployment level of 15% Natural Rate of Unemployment is 6%. Required Reserves is 25% C = 50 + 0.75Y; I = 600; G = 250 (note: T = 200 for

Reserves and a reserve requirement, If the Banking system has $500,000 in d...

If the Banking system has $500,000 in demand deposit liabilities, $125,000 in total reserves and a reserve requirement of 15%: What is the maximum amount by which the money supply

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd