What does the accelerator principles state?

  • A Consumption is a function of the rate of change of income
  • B income is a function of the rate of change of investment
  • C Investment is a function of the rate of change of income
  • D Investment is a function of the rate of interest

The correct answer is C. Investment is a function of the rate of change of income

Investment depends on the rate of change in income and that a change in income will cause a greater proportionate change in investment.

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