Which one of the following best describes the macroeconomic accelerator theory?
An initial increase in investment spending leading to a larger, cumulative rise in national income.
A rapid expansion in the money supply leading to a reduction in market interest rates and increased capital investment.
A change in the rate of growth of national output or consumer demand causing a proportionately larger change in investment expenditure.
Government injection of capital into public infrastructure projects to crowd-in private enterprise during a recession.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.