PRC-3 · Chapter 15 · Question 16 of 44
A factory requires Rs. 5 million worth of heavy machinery (capital) to permanently produce Rs. 1 million worth of extra output annually. In the accelerator model, the value '5' is known as the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Capital-Output ratio (v)
Explanation
The capital-output ratio defines how much capital is required to produce one unit of output, a central variable in determining the strength of the accelerator effect.
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