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Multiplier acceleration principle-acceleration principle
Keynes established the multiplier principle on the basis of consumption tendency. The economic meaning of multiplier principle can be summarized as follows: the influence of investment change on national income is greater than that of investment change, and investment change is often a multiple of investment change. Keynes obtained the exact relationship between national income (Y) and investment volume (I) through multiplier principle, and guided his economic theory into economic policy and practice. The so-called multiplier means that the increase (or decrease) of investment can lead to the increase (or decrease) of national income and employment several times under a certain marginal consumption tendency. The ratio of income increment to investment increment is the investment multiplier. Expressed by the formula: K=△Y/△I, where k stands for multiplier, △Y stands for income increment and △I stands for investment increment. At the same time, the increase of total income caused by the increase of investment also includes the indirect increase of consumption (△C), that is, △Y=△I +△C, which makes the size of investment multiplier closely related to consumption tendency, and the relationship between them can be deduced by mathematical formula as follows: k = △ Y/△ I = △ Y/(△ Y-△ C) = 60. As can be seen from the above formula, the higher the marginal propensity to consume, the greater the investment multiplier, and vice versa. The reference website lists the multiplier principle and its economic significance in detail. If you think the answer is useful, please list the best answer. The acceleration principle mainly explains how the amount of investment changes with the change of production.