The Flexible Accelerator Theory

question 68

Multiple Choice

The flexible accelerator theory

• A)recognizes that the desired capital-output ratio is not a constant.
• B)assumes that firms can make this period's actual capital stock equal to the desired capital stock.
• C)sets this period's expected output equal to last period's actual output.
• D)recognizes that a constant fraction of the capital stock is replaced each period.

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Definitions:

Annuity

A fiscal product designed to emit a stable series of disbursements to an individual, chiefly intended as support for retired people's income.

Perpetuity

A type of annuity that pays an infinite series of cash flows, continuing forever.

Constant Rate

A fixed, unchanging rate at which a specific quantity grows or decays over time.

Compounded Annually

The process of earning interest on both the initial principal and the accumulated interest from previous periods, calculated once per year.