AP Macroeconomics Question 66: Answer and Explanation
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4. According to Say's law,
- A. when price goes up, supply goes up
- B. it is better to give than receive
- C. demand creates its own supply
- D. supply creates its own demand
- E. demand and supply are mutually independent
Correct Answer: D
D Classical economists believe in Say's law, which suggests that when supplying goods, workers earn money to spend or save, and savings end up being borrowed and spent. Thus, they say that supply creates its own demand.