Importance (Significance) of the Accelerator

1.The introduction of the Principle of Acceleration enables us to understand the

process of income generation more clearly.

2. The theory of acceleration further explains why fluctuations in income and

employment occur rather violently.

3. It has helped us to show that small demand changes in consumption-goods

industries lead to considerably enlarged changes in investment-goods
industries.

4. Prof. Hicks’ theory of the business cycle is based primarily on the principle of
acceleration.

5. Prof. R.F. Harrod has based his theory of Steady Growth on the acceleration
principle.

6. Induced investment is very much useful in explaining the upper turning point
of a trade cycle.