Refer to the information above.Net investment becomes more unstable if j ________ and v* ________.

Question

Quizplus · Accepted Answer

Net investment becomes more unstable if the accelerator coefficient (j) rises, because it means that any change in income will have a larger effect on investment. Similarly, if the marginal efficiency of capital (v*) rises, it also makes net investment more sensitive to changes in income, thus more unstable.

Refer to the Information Above