Economics · Macroeconomics
The Accelerator Principle in investment theory states that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Investment is independent of output and depends only on the rate of profit
- 2Gross investment equals net investment minus depreciation
- 3Net investment is proportional to the rate of change of output (income), i.e., I = v(ΔY), where v is the capital-output ratio✓
- 4Net investment is a function of the rate of interest
Correct answer
Net investment is proportional to the rate of change of output (income), i.e., I = v(ΔY), where v is the capital-output ratio
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