Question

Are Say’s law and Keynes’ law necessarily mutually exclusive?

Short answer

Say's law and Keynesian law aren't mutually exclusive, but they apply to distinct periods of time.

Step-by-step solution

Step1. Introduction

According to Say's Law, supply produces its own demand.

According to Keynes' Law, demand creates its own supply.

Step2. Explanation

In the long run, Say's law, which is demand oriented, is applicable. Keynesian legislation, on the other hand, is supply-oriented and only applies for a short period of time.

In the long run, the items cannot be overproduced for an extended period of time. As a result, manufacturers will be hesitant to overproduce items. They also generate the purchasing power to purchase other items. As a result, in the long run, supply produces its own demand.

The term "short-run" refers to a period when businesses do not have the resources to meet demand. They have limited resources and can only improve output by a little amount. Producers are unable to enhance their output by constructing new facilities, plants, or machines. Similarly, if demand falls, producers will be able to lower their output. As a result, the Keynesian law "demand produces its own supply" holds true in the short run.

As a result, says law and Keynesian law are not mutually exclusive, but rather mutually reliant.