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      Question

      Which of the following are characteristic of the

      ‘Accelerator Theory’ of investment?
      A Relates gross investment to total output in a given year Correct Answer Incorrect Answer
      B Relates net investment to the rate of change of output Correct Answer Incorrect Answer
      C Relates net investment to total output in a given year Correct Answer Incorrect Answer
      D Involves a variable capital/output ratio to be applied when output rises below the full capacity level Correct Answer Incorrect Answer
      E All of these Correct Answer Incorrect Answer

      Solution

      The ‘Accelerator Theory’ of investment relates net investment to the rate of change of output.

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