The EzyEducation website uses cookies to help ensure we give you the best experience.
If you continue without changing your settings, we assume that you are happy to receive all cookies on the EzyEducation website.
Please refer to our Privacy and Cookies Statement to

find out more.

Continue

Accelerator effect

Although the focus in this model is often the short term aggregate demand effects it is crucial to make the connection to productivity and aggregate supply. As investment will increase the use of capital in the productive process this has the potential to increase productivity, the productive capacity of the economy. This will help to shift LRAS and produce sustainable economic growth by increasing real output without inflationary consequences.