Acceleration principle

Acceleration principle,

Definition of Acceleration principle:

  1. The acceleration principle is also referred to as the accelerator principle or the accelerator effect.

  2. Concept in economics that explains the link between output and capital investment. It states that an increase or decrease in the demand for consumer goods will cause a greater increase or decrease in the demand for machines required to make those goods. In other words, there is a direct relationship between the rate of output of an economy and the level of investment in capital goods. Also called accelerator principle.

  3. The acceleration principle is an economic concept that draws a connection between changing consumption patterns and capital investment. It states that if appetite for consumer goods increases, demand for equipment and other investments necessary to make these goods will grow even more. In other words, if a population's income increases and its residents, as a result, begin to consume more, there will be a corresponding but magnified change in investment.

Meaning of Acceleration principle & Acceleration principle Definition