Fhe acceleration Principle describes an accelerating demand for a good or service resulting in considerable increase in entrepreneurial activity and capital accumulation. The resulting investment in producers goods is large and significant but is followed by a decrease ind emand resulting in a disproportional amount of idle investment relative to the reduced demand for a good or service. As a boom progresses the harder it becomes to buy machines and equipment plants are overloaded with orders for these things their customers must wait a long time before machines are delivered. this generally argues against the acceleration principle. Yet the utility use of the acceleration principe is very positive because A. The level of inventory investment can be explained very well with it B. all of the above C. Investment spending is proportional to the change in output D. It is not affected by the cost of capital

Fhe acceleration Principle describes an accelerating demand for a good or service resulting in considerable increase in entrepreneurial activity and capital accumulation. The resulting investment in producers goods is large and significant but is followed by a decrease ind emand resulting in a disproportional amount of idle investment relative to the reduced demand for a good or service. As a boom progresses the harder it becomes to buy machines and equipment plants are overloaded with orders for these things their customers must wait a long time before machines are delivered. this generally argues against the acceleration principle. Yet the utility use of the acceleration principe is very positive because A. The level of inventory investment can be explained very well with it B. all of the above C. Investment spending is proportional to the change in output D. It is not affected by the cost of capital

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The acceleration Principle describes an accelerating demand for a good or service resulting in
considerable increase in entrepreneurial activity and capital accumulation. The resulting
investment in producers goods is large and significant but is followed by a decrease ind emand
resulting in a disproportional amount of idle investment relative to the reduced demand for a
good or service. As a boom progresses the harder it becomes to buy machines and equipment
plants are overloaded with orders for these things their customers must wait a long time before
machines are delivered. this generally argues against the acceleration principle. Yet the utility
use of the acceleration principe is very positive because
A. The level of inventory investment can be explained very well with it
B. all of the above
C. Investment spending is proportional to the change in output
D. It is not affected by the cost of capital

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