ECON 307

In Class Exercise Eleven - Say

1.  Explain Say's Law of Markets:

a.  Why is production necessary for consumption?

b.  Those who live off of others do not produce productivity that allows them to consume but they also do not provide evidence that Say was wrong - why?

c.  Why should producers in a community celebrate the success of other producers?

d.  A good government policy does what?  A bad government policy would do what?

e.  Can you believe in the overall premise of the theory without believing in the so-called equilibrium aspect of it?  Explain.

2.  What are two ways markets will adjust on their own if there is a "glut" on the market (at least the so-called equilibrium idea of markets)?

3. Say would say that falling prices due to productivity increases is not a bad thing -- in fact it is good -- why?

4.  What is Say's theory of interest?  Where did it come from?  Why is it considered a "real" rate of interest theory?

5.  Does Say like taxes in general?  Why or why not?  How would he respond to those who see a statistical (positive) correlation between prosperity and taxation?

6.  Do you have any other questions over this material?