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Accelerator Model

Definition of 'Accelerator Model'

This states that firms invest more when output is rising than when it is falling. A rise in demand leads to a rise in output, and firms therefore see it as more profitable to have more capital invested due to current demand, and therefore invest more.

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Related Terms

Arbitrage Pricing Model CAPM Characteristics Line Factor Model Model Theoretical Value Arbitrage Pricing Theory Black Scholes Capital Asset Pricing Model Data-Snooping Model Code for Directors Dealings Security Market Line Seperation Theorem

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