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Consumption and Investment Functions — Economics STD 12 — Question

Tamilnadu BoardEnglish MediumSTD 12EconomicsConsumption and Investment Functions3 Marks
Question
Write the Accelerator Assumptions?
✓

Answer

Assumptions:
  1. Absence of excess capacity in consumer goods industries.
  2. Constant capital – output ratio
  3. Increase in demand is assumed to be permanent
  4. Supply of funds and other inputs is quite elastic
  5. Capital goods are perfectly divisible in any required size.

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