If the economic growth rate SLOWS from 5% to 1%,the simple accelerator hypothesis suggests that

Question

Quizplus · Accepted Answer

The simple accelerator hypothesis suggests that investment is directly proportional to the change in output. If the economic growth rate slows from 5% to 1%, it implies that there will be a slowdown in the rate of change of output, which would result in a fall in investment as output increases. Therefore, option B is the correct answer.

If the Economic Growth Rate SLOWS from 5% to 1%,the