CA Foundation P4 · Chapter 6 · Question 14 of 15
Samuelson and Hicks explained business cycles through the interaction of:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The multiplier and the accelerator
Explanation
In the multiplier-accelerator model, a rise in investment raises income via the multiplier; the rise in income induces further investment via the accelerator (investment depends on the change in output). This interaction can generate cumulative upswings and downswings.
More Business Cycles MCQs
- Q1The correct sequence of the phases of a business cycle is:
- Q2Which statement about business cycles is correct?
- Q3Which of the following is generally regarded as a leading indicator of economic activity?
- Q4Industrial production, which moves at the same time as the overall economy, is an example of a:
- Q5Which of the following is a characteristic of the depression phase?