From the Accelerator Model We Learn That

question 33

Multiple Choice

From the accelerator model we learn that

• A)the level of investment is proportional to the level of output
• B)the change in investment is proportional to the change in output
• C)the change in investment increases as the level of output increases
• D)the level of investment increases as the change in output increases
• E)net investment decreases if the desired capital stock is greater than the actual capital stock

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Definitions:

Marginal Tax Rate

The rate of tax that applies to the last dollar of the taxpayer's income, affecting additional income earned.

Salvage Value

The projected value at which an asset can be sold after its usage period has ended.

Net Investment

The total amount of money spent on acquiring or maintaining fixed assets after accounting for depreciation.

MACRS

Modified Accelerated Cost Recovery System, a method of depreciation applied in the U.S. to determine the tax-deductible value of assets over time.