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Economics (AS & A Level) · Oct / Nov 2023 · Paper 31 · Question 22

9708The circular flow of income

What is the basic assumption underlying the accelerator theory?

  1. AInvestment depends on the level of business confidence.
  2. BInvestment depends on the level of savings.
  3. CInvestment depends on the rate of change in national income.
  4. DInvestment depends on the rate of change of interest rates.

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Correct answer: C. Investment depends on the rate of change in national income.

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