Macro: Say’s Law Overiew

Say’s Law is a cornerstone of economic theory, particularly that which is given the loaded label of “Classical” economic theory.

Supply creates its own demand

When an economy produces a certain level of real GDP, it also generates the income needed to purchase that level of real GDP. In other words, the economy is always capable of demanding all of the output that its workers and firms choose to produce. Hence, the economy is always capable of achieving the natural level of real GDP.