In business, the accelerator theory is the theory that the level of investment is proportional to the output of an economy. Based on the observation that investment tends to fluctuate more than the rate of growth of the economy, the theory played a major role in early Keynesian models of the economy. However, it is not clear that there is a fixed capital-output ratio for an economy; investment decisions are based on a variety of factors, such as interest rates, business confidence, and profitability. The accelerator theory fails to provide an adequate account of these factors. Research Accelerator Theory
The Probert Encyclopaedia was designed, edited and programed by
Matt and Leela Probert
Abbreviations
Research Accelerator Theory
