Abiblo Economics - Accelerator

​Accelerator 
It is an economic model which study the relationship between investment and to the change in the output. 
 
The accelerator model affirms that the firms will invest more if the output is rising and the firm will invest less if the output is falling.
 
Behind this model, there is an underlying principle of demand and supply. If there is a rise in demand, the firm will produce more. This will lead to the rise of output.
 
The rise in output raises the ratio of output to capacity.This will lead to further expectation of further rises in demand and it will be more profitable for the firms to have more capital equipments.