Question

Do neoclassical economists believe in Keynes’ law or Say’s law?

Short answer

Neo-classical economists believed in Say's law.

Step-by-step solution

Concept introduction

Neoclassical economists believe that the primary aim of consumers is to increase self-fulfillment.

Say’s law of market states that the supply of the goods in the market creates their own demand. According to Keynes' law, demand generates its own supply.

Explanation

Neoclassical economists were those who believed in Say's law, which asserted full employment in the long run. According to Say's law, supply and demand will adjust, resulting in a price increase or decrease. He claimed that markets should function without government intervention. According to Keynes' law, demand generates its own supply. He contended that due to a lack of aggregate demand, the economy is frequently inefficient, producing less than its potential. When there is a scarcity of demand, businesses are less inclined to create.