1.5 The Multiplier and the Accelerator

National Income Multiplier?

The National Income Multiplier - "where an initial change in national income results in a larger final change in national income" (then will have info of onenote page on next few flashcards…)

two Accelerator definitions to know

The Accelerator effect - “where an increase in the rate of economic growth can lead to a much larger proportional increase in investment, further accelerating increases in national income”

 

The Accelerator Theory - “the level of investment depends on the rate of economic growth. So as a result, investment tend to be subject to substantial fluctuations.”

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