The Multiplier principle implies that investment increase output whereas the acceleration principle implies that increases in output will themselves induce increases in investment.
Acceleration principle explains the link between output and capital investment. It states that an increase or decrease in the demand for consumer goods will cause a greater increase or decrease in the demand for machines required to make those goods. In other words, there is a direct relationship between the rate of output of an economy and the level of investment in capital goods
Acceleration principle explains the link between output and capital investment. It states that an increase or decrease in the demand for consumer goods will cause a greater increase or decrease in the demand for machines required to make those goods. In other words, there is a direct relationship between the rate of output of an economy and the level of investment in capital goods
0 comments:
Post a Comment