Multiple choice

Which of the following relationships correctly represent the acceleration principle as defined by Paul A. Samuelson?

  1. Iut = β Δ Yt - 1

  2. Iut = β (Ct - Ct - 1)

  3. Iut = β (Yt - Yt - 1)

  4. Iut = β (Ct - 1 - Ct - 2)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Samuelson's acceleration principle states that induced investment depends on changes in consumption demand, not output. Option B correctly shows Iut = β(Ct - Ct-1), meaning investment in period t is proportional to the change in consumption between periods t and t-1. Options A and C incorrectly use output (Y), while D uses a two-period lag.

Keep practicing — related questions