Which of the following statements is true about Say's law?

Question

it states that supply creates its own demand

it states that demand creates its own supply

it states that total output will always exceed total spending

it states that consumption spending is the most volatile component of aggregate expenditures

Answer 1

The true statement about Say's Law is:

It states that supply creates its own demand.

Say's Law, attributed to French economist Jean-Baptiste Say, suggests that production (supply) of goods and services will generate an equivalent level of demand in the economy. In other words, the act of producing goods provides the means for consumers to purchase those goods, thus creating demand.