What is meant accelerator principle?
This explains the relationship between consumption and investment.
It states that any change in consumption spending leads to a change in investment spending. Therefore; investments are accelerated when there is an increase in consumption in the short run.
The accelerator refers to the number of times the initial change in consumption(ΔC) multiplies itself to give a final change in induced investment(ΔI).
CATEGORIES Economics
TAGS Dr. Bbosa Science