CannonEssays

1. Accelerator Effect:

2. Adjustment Paths:

3. Flexible Accelerator:

4. Marginal Propensity To Invest From Income:

5. Optimum Capital Stock:

6. Oscillatory Movement About Equilibrium:

7. Period Model:

8. Replacement Capital Goods:

9. Rigid Accelerator Mechanism:

10. Unstable Equilibrium:

Papers

Investment Expenditures and Income

Accelerator Effect:

An effect making investment expenditures a positive function of changes in aggregate output and real income. It arises from the production function relationship indicating the capital stock requirements for producing various levels of aggregate output.

Adjustment Paths:

The paths economic variables follow when disturbed from equilibrium values.

Flexible Accelerator:

A mechanism which allows for qualifications to the rigid accelerator by including the blunting effect of excess capacity and the influence of changes in the relative prices of capital and labor on the optimum capital to output ratio. The flexible accelerator presents investment expenditures as closing only a portion of the gap between optimum and actual capital each period.

Marginal Propensity To Invest From Income:

The coefficient of real income in the investment expenditure function-4//4Y.

Optimum Capital Stock:

The stock of capital goods which maximizes profits.

Oscillatory Movement About Equilibrium:

An adjustment path following a disturbance featuring a recurrent movement above and below the value yielding equilibrium.

Period Model:

A model tracing the paths of the variables it involves over successive time periods. A dynamic model.

Replacement Capital Goods:

Capital goods which merely replace those used up in production.

Rigid Accelerator Mechanism:

The mechanism by which net investment expenditures are rigidly tied to changes in the level of output through capital accumulation requirements determined by a fixed capital to output ratio.

Unstable Equilibrium:

Equilibrium which is not restored when disturbed or which is achieved from the disequilibrium state.