Answer to Question #236388 in Macroeconomics for KAT

Question

Examine the similarities and dissimilarities between accelerator theory and flexible accelerator theory.

Answer 1

The similarity between the accelerator theory and flexible accelerator theory is that as demand and prodution increase ,firms invest to increase production capacity.

The difference between accelerator theory and flexible accelerator theory is that the accelerator claims that when there is an increase in investment, income is increased by a considerable amount while flexible accelerator theory tends to be the numerical value of links between investment increase brought by income increase.