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09 March 2018

What are the differences between multiplier and accelerator



Multiplier
Accelerator
(i) The multiplier shows the effect of change in investment on income and consumption.
(i) The accelerator shows the effect of increase in income and consumption on investment.
(ii) Multiplier is a static concept.
(ii) Accelerator is dynamic concept.
(iii) Multiplier depends on psychology.
(iii) The accelerator depends on technical factors.
(iv) It depends on MPC, MPI. This all are psychological.
(iv) It depends on the fact that a given amount of capital is required to produce a given amount of final product.
(v) There are many classification of multiplier such as investment multiplier, employment multiplier, tax multiplier etc.
(v) There is no classification in accelerator.
(vi) The formula of multiplier is,

(vi) The formula of accelerator is,





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