Define accelerator

Accelerator: The accelerator explains the process by which an increase or decrease in the demand for consumption goods leads to an increase or decrease in investment or capital goods.

According to kurihara, “The accelerator coefficient is the ratio between induce investment and initial change in consumption expenditure.”

Example: If the increase in consumption expenditure of 10 crores leads to an increase in investment of 30 crores, the accelerator coefficient is 3.