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Understanding the Accelerator Effect

Level:
A-Level, IB Diploma
Board:
AQA, Edexcel, Eduqas, IB, OCR, WJEC

Last updated 2 Jul 2018

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What is the accelerator effect?

The accelerator effect happens when an increase in national income (GDP) results in a proportionately larger rise in capital investment spending. In other words, we often see a surge in capital spending by businesses when an economy is growing quite strongly.

Difference between the Accelerator and the Multiplier - Revision Video

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