Proposition And Implication Of The Say's Law of Market

 

Say's Law of Market 

Proposition And Implication Of The Say's Law of Market 

Say's propositions and its implication present the true picture of the market law these are given below

Full Employment in the Economy 

The law is based on the proposition that their is full employment in the economy. Increase in production means more employment to the factor of production. Production continues to increase until the level of full employment is reached. Under such a situation, the level of production will be maximum

Proper Utilisation of Resources

If there is full employment in the economy idle resources will be properly utilised will be further help to produce more and also generate more income.

Perfect Competition

Says law of market is based on the proposition of perfect competition in labour and product market other continue or perfect competition or as given below:-

Size of the Market 

According to Say's law, the size of the market is large enough to create demand  for goods. Moreover the size of the market is also influenced by the forces of demand and supply of various inputs.

Automatic Adjustment Mechanism

The law is based on the preposition that they are is automatic and self adjusting mechanism in different market.

 Disequilibrium in any market is a temporary situation. For example in capital market the equality between saving and investment is maintained by the rate of interest while in the labour market the adjustment between demand and supply of Labour is maintain by the wage rate

Role of Money as Neutral

The law is based on the proposition of a barter system where goods are exchanged for goods. But it is also assumed that the role of money is neutral. Money does not affect the production process.

Laissez-fair Policy

The law assume a closed capitalist economy which follows the policy of Lassez-fairs. The policy of Laissez-faire  is essential for an automatic and self adjusting process of full employment equilibrium

Saving as a Social Virtue

All factor income is spend in buying goods which they help to produce. Whatever is saved is automatically invested for frother production. In other word saving is a social virtue.