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Q. Explain Reversed Say's Law?
In the cross model, supply should instead follow demand. Cross model not only rejects Say's Law, it turns it entirely upside down. In the cross model 'demand creates its own supply'.
Just as Say's Law is criticized by many economists, there is criticism of this reversed form of Say's Law. Firms passively produce exactly what consumers want. If there is an increase in demand, firms would just produce this extra quantity. Motivation for this behaviour by the firms is further analysed when we describe the labor market in the cross model.
Suppose a major brokerage firm advised its clients to buy cigarette stocks under the assumption that, if consumer incomes rise by 50% as expected over the next decade, cigarette sa
Q. Demand for money for AS-AD model? The money market The demand for money depends negatively on R,positively on Y and positively on P in AS-AD model
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