According to the Accelerator Theory of Investment, an Increase in the Expected

question 12

Multiple Choice

According to the accelerator theory of investment, an increase in the expected future growth rate of real GDP will cause:

• A) current investment spending to decrease.
• B) future investment spending to decrease.
• C) future investment spending to increase.
• D) current investment spending to increase.

---

Definitions:

Average Operating Assets

Average operating assets are calculated by averaging the total value of a company's assets at the beginning and end of an accounting period, used in evaluating asset efficiency.

Minimum Required Rate Of Return

The lowest return on investment that a person or organizational entity, like a company, would accept for a given investment.

Stockholders' Equity

Represents the owners' claim after subtracting total liabilities from total assets; it consists of initial capital investment, retained earnings, and additional paid-in capital.

Net Operating Income

The income that comes from a firm's primary business activities, not including the subtraction of interest and taxes.