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    I am looking at the multiplier and accelerator at A2, and I understand the concepts, as in I understand how they work seperatly, but I do not understand how they work together, the interaction of the multiplier and accelerator is not clear to me. Someone who has a better understanding care to explain how exactly these work together?
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    (Original post by DarkRoast)
    I am looking at the multiplier and accelerator at A2, and I understand the concepts, as in I understand how they work seperatly, but I do not understand how they work together, the interaction of the multiplier and accelerator is not clear to me. Someone who has a better understanding care to explain how exactly these work together?
    Accelerator = a change in national output --> a bigger than proportionate change in Investment

    Multiplier = A change in G/C/I --> a bigger than proportionate change in RNO

    Hence then work together in the sense that when a multiplier starts the process eg. if firms invest then multiplier takes place with employment, so on which leads to an increase in RNO, after this increase in RNO, firms may get more confident and invest even more. Therefore Multiplier bringing about an accelerator, or it could be the other way around
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    (Original post by Skilled)
    Accelerator = a change in national output --> a bigger than proportionate change in Investment

    Multiplier = A change in G/C/I --> a bigger than proportionate change in RNO

    Hence then work together in the sense that when a multiplier starts the process eg. if firms invest then multiplier takes place with employment, so on which leads to an increase in RNO, after this increase in RNO, firms may get more confident and invest even more. Therefore Multiplier bringing about an accelerator, or it could be the other way around
    Ah that makes sense when put along side the interaction of the multiplier and accelerator diagram,

    cheers.
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    (Original post by DarkRoast)
    Ah that makes sense when put along side the interaction of the multiplier and accelerator diagram,

    cheers.
    Np and good luck!
 
 
 
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