Which of the Following Is a Primary Implication of the Accelerator

question 24

Multiple Choice

Which of the following is a primary implication of the accelerator theory of investment?

• A)Net investment occurs when the desired and actual capital stocks are equal.
• B)In order for gross investment to remain constant,income must remain constant.
• C)Rising rather than high levels of output are necessary to maintain a high level of net investment.
• D)B and C are both correct.

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Definitions:

Econometrics

The application of statistical and mathematical theories to economics for the purpose of testing hypotheses and forecasting future trends.

Asset Betas

Measure the sensitivity of an asset's returns to market returns, representing the systematic risk of assets not attributable to market-wide movements.

Average Excess Returns

The average return on an investment above the return of a benchmark or risk-free asset.

Quasilinear

Pertaining to equations or functions that are nearly, but not exactly, linear in their behavior or representation.