Day: November 24, 2022

A closed economy is initially in equilibrium with a national income of £100 million, and a capital stock of £25 million.

Aggregate demand increases by £10million.

According to the accelerator principle, by how much will net investment increase?

Select ONE answer:

1. £10m
2. £5m
3. £2.5m
4. £2m

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.