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2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts

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Question 28

The table below shows the real GDP figures for a hypothetical economy over a three-year period:

YearReal GDP (£ billions)
2021500
2022560
2023600

Assuming a constant, positive capital-output ratio, the accelerator theory predicts that between 2022 and 2023,

planned net investment will become negative because the rate of economic growth has slowed.

planned net investment will fall, but remain positive.

planned net investment will increase because the absolute level of real GDP has risen.

planned net investment will remain constant because the economy is still growing.

2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts Questions

  1. A Level
  2. /Economics
  3. /2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts