Question

Drawing Assume a capital ratio of 2:1 Desired output level Demand (K Output level) Level of Net Investment 200 220 250 300 40

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Topic is Accelerator principle of investment

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SOLUTION:
Desired output level Demand (K level) Change in output Level of net investment
200 400
220 440 20 40
250 500 30 60
300 600 50 100
400 800 100 200
600 1200 200 400
700 1400 100 200
WORKING
Desired output level Demand (K level) Change in output Level of net investment
200 400
220 440 (440-400)/2 = 20 (440-400) = 40
250 500 (500-440)/2 = 30 (500-440) = 60
300 600 (600-500)/2 = 50 (600-500) = 100
400 800 (800-600)/2 = 100 (800-600) = 200
600 1200 (1200-800)/2 = 200 (1200-800) = 400
700 1400 (1400-1200)/2 = 100 (1400-1200) = 200
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