Grand economics society

✓ Understanding Accelerator Theory The accelerator theory was conceived by Thomas Nixon Carver and Albert Aftalion, among others, before Keynesian economics, but it came into public knowledge as the Keynesian theory began to dominate the field of economics in the 20th century.  ✓ The accelerator theory is an economic postulation whereby investment expenditure increases when either demand or income increases. The theory also suggests that when there is excess demand, companies can either decrease demand by raising prices or increase investment to meet the level of demand. The accelerator theory posits that companies typically choose to increase production, thereby increasing profits, to meet their fixed capital to output ratio. ✓ Fixed capital to output ratio states that if one (1) machine was needed to produce a hundred (100) units and demand rose to two hundred (200) units, then investment in another machine would be needed to meet this increase in demand. From a macro-policy poin...

✓ WHAT IS DEFLATION? Deflation is a condition of economies, it prompts a situation where the supply of money is fixed and does not grow as quickly as population and the economy. When this happens the available amount of hard currency per person falls, thereby making money more scarce and consequently the purchasing power of each unit of currency increases. OR We can say deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but sudden deflation increases it. This allows more goods and services to be bought than before with the same amount of currency. Deflation is distinct from disinflation, a slow-down in the inflation rate, i.e. when inflation declines to a lower rate but is still positive. STAY TUNED FOR MORE UPDATES