What is the accelerator?

• What is the accelerator?:

  • The accelerator is the principle that a change in the level of investment in new capital goods is induced by a change in the rate of growth, national income or aggregate demand
  • Therefore, the investment in new machinery is dependent upon levels of GDP
• What is an example of the accelerator?:

  • An increase in demand for mobile broadband means that there is an increase in investment for mobile networks