0
The interaction of multiplier and accelerator which bring change in gross national income. The components of theory are warranted growth rate, consumption function, autonomous investment, induced investment and multiplier accelerator relationship. The economy is growing at warranted growth rate when saving and investment are equal. The economic fluctuations around the warranted growth rate are due to working of multiplier and accelerator. The consumption is considered the function of income of the previous period. When consumption lags behind income, the multiplier is treated as lagged relation. Autonomous investment is free from changes in output level so it is not concerned with growth of economy. Induced investment has a link with changes in output so it is related with economic growth rate. The accelerator is based on induced investment.
When investment level falls, the accelerator-multiplier works on the reverse direction. The price of contraction is slow as compared to expansion due to asymmetrical working accelerator. During expansion phase the limit to the expansion of real investment is set by production system capacity. In case of downturn the limit to disinvestment is set by depreciation. The businessman does not replace the worn-out machines. During slump multiplier work in reverse order and accelerator has limited role. Autonomous investment declines during slump but remains positive.
The cyclical process is repeated in this way.
Add your answer:
Earn +20 pts
What is super multiplier?
super multiplier refers to interaction of the multiplier and accelerator.
A theory that the business cycles are caused by the interaction of thee multiplier and the accelerator-is known as?
the "Multiplier Accelerator Theory"
What is the difference between the multiplier and the accelerator?
the multiplier principle implies that investment increases output whereas the acceleration principle implies that increases in output will themselves induce increases in investment.
Who discovered the Lagrange multiplier was it really Joseph-Louis Lagrange If not why is it called the Lagrange Multiplier?
Legendre
What we called the two numbers that are being multiplied?
Multiplicand times multiplier equals product.
Numbers that are multiplied together to give a product are?
They are called the multiplicand and the multiplier. The multiplicand is the number that is being multiplied by the multiplier. 6 (multiplicand) x 3 (multiplier) __________ 18 (product)
The annswer of multiplication is called?
The answer to a multiplication problem is called the product.
What are the numbers called in a multiplacation problem?
multiplier times multiplicand equals product or multiplicand times multiplier equals product
What is it called when the number doing the multiplying in a multiplication problem?
The two numbers multiplied are called the multiplier and the multiplicand. The result is the product. So multiplicand x multiplier = product
What are the 2 numbers multiplied together called?
multiplicand and multiplier
What are the practical differences between simple multiplier and super multiplier?
The simple multiplier implies that investment is the central determinant of output. The super multiplier combines the multiplier with the accelerator that indicates that investment is not autonomous, but is part of derived demand. Hence, the super multiplier indicates that capacity adjusted output is determined by autonomous demand. Autonomous demand in the case of the super multiplier would correspond to government spending, exports and some elements of consumption (particularly the wealthy whose consumption is not constrained by income). The practical difference is that not only demand determines output in the short run, but also in the long run. The economic system is effectively demand driven and Keynes' Principle of Effective Demand substitutes Say's Law.
What are the numbers called in a multiplcation problem?
The multiplicand and the multiplier. Both can also be called factors.
