Acceleration principle – Definition & Meaning

The acceleration principle is a concept in economics that explains the relationship between changes in demand and changes in investment. It is a theory that suggests that an increase in demand for a particular product or service will result in an increase in investment in the production of that product or service. The acceleration principle is an important concept in macroeconomics and is often used to explain the business cycle.

Definitions

The acceleration principle is defined as the relationship between changes in demand and changes in investment. It suggests that an increase in demand for a particular product or service will result in an increase in investment in the production of that product or service. The acceleration principle is also known as the investment accelerator theory.

Origin

The acceleration principle was first introduced by economist John Maynard Keynes in his book “The General Theory of Employment, Interest, and Money” in 1936. Keynes used the acceleration principle to explain the behavior of investment in response to changes in demand. The theory was further developed by economists like Paul Samuelson and Alvin Hansen in the 1940s and 1950s.

Meaning in different dictionaries

According to the Merriam-Webster dictionary, the acceleration principle is “a principle in economics: an increase in the demand for goods and services leads to an increase in the investment needed to produce them.” The Oxford English dictionary defines it as “the principle that an increase in demand for goods will lead to an increase in investment in the production of those goods.”

Associations

The acceleration principle is closely associated with the business cycle and the behavior of investment in response to changes in demand. It is often used to explain the fluctuations in economic activity that occur over time.

Synonyms

The investment accelerator theory is a synonym for the acceleration principle.

Antonyms

There are no direct antonyms for the acceleration principle, but it can be contrasted with the multiplier effect, which explains the relationship between changes in investment and changes in output.

The same root words

The word “acceleration” is derived from the Latin word “accelerare,” which means “to hasten.” The acceleration principle is based on the idea that changes in demand can hasten changes in investment.

Example Sentences

  1. According to the acceleration principle, an increase in demand for a particular product will lead to an increase in investment in the production of that product.
  2. The acceleration principle is an important concept in macroeconomics that helps explain the behavior of investment in response to changes in demand.
  3. The acceleration principle can be contrasted with the multiplier effect, which explains the relationship between changes in investment and changes in output.
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