ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -A positive accelerator effect occurs when an increase in the rate of growth of consumer demand leads to a rise in planned capital investment by businesses. For example, rising demand for streaming services might lead businesses such as Netflix and Disney+ to increase investment in server hardware.
Detailed explanation-2: -Negative accelerator effect If there is a fall in the growth of demand, then net investment will fall as firms cut back on starting new investment projects.
Detailed explanation-3: -It states that when demand for consumer goods increases, demand for equipment and other investments necessary to make these goods will grow if there is not excess capacity in the economic system already to make these goods.
Detailed explanation-4: -What is the accelerator effect? The accelerator effect describes a principle where how much a business chooses to spend on capital investment will be influenced by how quickly demand is growing for their products.