The concept of 'Accelerator Principle' states that:
A. Saving depends only on income
B. Investment depends on the rate of change of income or output
C. Investment depends on the level of income
D. Consumption depends on the rate of interest
Answer: Option B
Solution (By JKSSB Mock Tests)
The accelerator principle posits that net investment is a function of the change in output or income; a rise in demand induces a multiple increase in investment.
Explanation:
Tax salience measures how visible or noticeable a tax is to the agents who pay it; less salient taxes tend to produce smaller behavioural responses than more salient ones of equal magnitude.
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