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MENTAL MODEL · M5998

Accelerator Principle

Accelerator Principle
BusinessHigh supportMacroeconomics
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

The Accelerator Principle refers to the phenomenon where an increase in government purchases raises planned expenditure, thereby increasing total income. The rise in total income then boosts consumption, which further increases planned expenditure and total income. This cycle repeats, ultimately causing total income to increase by a multiple of the initial change.

SCAFFOLDING EFFECT

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The Accelerator Principle states that induced investment is proportional to changes in output; the capital coefficient (capital-output ratio) amplifies small changes in output into large fluctuations in investment—because to meet marginal new demand, firms must purchase capital goods in batches. Consequently, fluctuations in upstream sectors (equipment, raw materials) are significantly amplified, exceeding those in downstream consumer goods.

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The Accelerator Principle states that induced investment is proportional to changes in output; the capital coefficient (capital-output ratio) amplifies small changes in output into large fluctuations in investment—because to meet marginal new demand, firms must purchase capital goods in batches. Consequently, fluctuations in upstream sectors (equipment, raw materials) are significantly amplified, exceeding those in downstream consumer goods.

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Source support: Explicit

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    zh.wikipedia.orghttps://zh.wikipedia.org/wiki/%E5%8A%A0%E9%80%9F%E5%8E%9F%E7%90%86ZH · Explicit
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