Accelerator-Multiplier Model

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Accelerator-Multiplier Model

A model for the business cycle at the macroeconomic level. The accelerator-multiplier model is cyclical and has three phases. First, the government increases its expenditures, which increases consumer income. The increase in income leads consumers to buy more goods and services, which increases economic output. The higher output leads to higher investment in the economy. As the name implies, it combines the Keynesian multiplier model with the accelerator model.