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In the context of the acceleration principle, what happens to investment during a downward economic swing?
  • a)
    Investment increases due to lower demand for capital goods.
  • b)
    Investment remains constant regardless of consumption changes.
  • c)
    Investment becomes limited by replacement demand and cannot fall below depreciation.
  • d)
    Investment becomes negative, leading to disinvestment.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
In the context of the acceleration principle, what happens to investme...
During a downward economic swing, the value of the accelerator is limited by replacement demand and cannot fall below the amount of depreciation. This means that investment cannot decrease beyond a certain point even if consumption decreases.
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In the context of the acceleration principle, what happens to investment during a downward economic swing?a)Investment increases due to lower demand for capital goods.b)Investment remains constant regardless of consumption changes.c)Investment becomes limited by replacement demand and cannot fall below depreciation.d)Investment becomes negative, leading to disinvestment.Correct answer is option 'C'. Can you explain this answer?
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In the context of the acceleration principle, what happens to investment during a downward economic swing?a)Investment increases due to lower demand for capital goods.b)Investment remains constant regardless of consumption changes.c)Investment becomes limited by replacement demand and cannot fall below depreciation.d)Investment becomes negative, leading to disinvestment.Correct answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about In the context of the acceleration principle, what happens to investment during a downward economic swing?a)Investment increases due to lower demand for capital goods.b)Investment remains constant regardless of consumption changes.c)Investment becomes limited by replacement demand and cannot fall below depreciation.d)Investment becomes negative, leading to disinvestment.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In the context of the acceleration principle, what happens to investment during a downward economic swing?a)Investment increases due to lower demand for capital goods.b)Investment remains constant regardless of consumption changes.c)Investment becomes limited by replacement demand and cannot fall below depreciation.d)Investment becomes negative, leading to disinvestment.Correct answer is option 'C'. Can you explain this answer?.
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