What does the accelerator principles state?

A. Consumption is a function of the rate of change of income
B. income is a function of the rate of change of investment
C. Investment is a function of the rate of change of income
D. Investment is a function of the rate of interest

Correct Answer:

Option C – Investment is a function of the rate of change of income

Explanation

Investment depends on the rate of change in income and that a change in income will cause a greater proportionate change in investment.