The concept of 'Multiplier-Accelerator Interaction' is associated with:
A. International trade theories
B. Business cycle theories
C. Public finance theories
D. Monetary theories
Answer: Option B
Solution (By JKSSB Mock Tests)
The interaction between the multiplier and accelerator is used in theories of business cycles (e.g., by Samuelson and Hicks) to explain fluctuations in economic activity.
Explanation:
In the specific-factors (Ricardo-Viner) model, each industry has a factor that is specific to it (immobile) while at least one factor (usually labour) is mobile between industries, generating clear distributional predictions of trade.
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