According to the acceleration principle, what effect does an increase in demand for consumption goods have on the demand for investment goods?

It leads to a decrease in investment demand.

It has no effect on investment demand.

It causes a proportional increase in investment demand.

It results in a larger increase in investment demand.

What is the key difference between the multiplier and the accelerator?

Multiplier depends on changes in consumption, while the accelerator depends on changes in investment.

Multiplier depends on changes in investment, while the accelerator depends on changes in consumption.

Multiplier is dependent on psychological factors, while the accelerator is dependent on technological factors.

Multiplier measures the effect of growth in investment on consumption, while the accelerator measures the effect of growth in consumption on investment.

In the context of the acceleration principle, what does the term "accelerator" refer to?

A tool used for measuring investment demand.

A principle that explains fluctuations in consumption goods industries.

An economic concept related to the changes in investment due to changes in consumption.

A coefficient that represents the relationship between consumer goods and capital goods demand.

What does the value of the acceleration coefficient indicate?

The rate of change in investment due to changes in consumption.

The ratio of capital goods demand to consumer goods demand.

The level of consumption needed for induced investment.

The proportion of investment contributed by the government.

How does the value of the acceleration coefficient relate to the durability of machines?

A higher durability leads to a higher value of the coefficient.

A lower durability leads to a higher value of the coefficient.

Durability of machines has no impact on the coefficient.

A higher durability leads to a lower value of the coefficient.

In the context of the acceleration principle, what happens to investment during a downward economic swing?

Investment increases due to lower demand for capital goods.

Investment remains constant regardless of consumption changes.

Investment becomes limited by replacement demand and cannot fall below depreciation.

Investment becomes negative, leading to disinvestment.

According to the acceleration principle, how does investment respond to changes in output?

Investment is inversely related to changes in output.

Investment is directly proportional to changes in output.

Investment is determined solely by the rate of depreciation.

Investment remains constant regardless of changes in output.

What is the relationship between excess capacity and investment according to the acceleration principle?

Excess capacity leads to an increase in investment demand.

Excess capacity has no impact on investment.

Excess capacity reduces investment demand.

Excess capacity increases the capital-output ratio.

What is the key factor that the acceleration principle emphasizes as a determinant of investment?

Government policies on consumption.

Changes in consumer preferences.

Changes in technology and capital durability.

The Acceleration Principle Free MCQ Practice Test with Solutions

	Macro Economics 59 videos\|61 docs\|29 tests

	Macro Economics 59 videos\|61 docs\|29 tests

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