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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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