eco6652, this topic is available

Hey juhi-ga,

In Keynesian macroeconomic theory, the multiplier and accelerator
effects simulate aspects of the real-world relationship between
consumption and investment. The multiplier effect recognizes that
investment spending translates to some degree to increased earnings
for some in the economy and also allows for increased government
spending. The accelerator mechanism accounts for influence in the
other direction, consumption affecting investment. These conditions
create instability in the Keynesian model.

Here's a document that discusses these constructs:

http://instruct.westvalley.edu/barnikel/keynesiantheory.html

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Clarification of Answer by mmi-ga on 28 Jun 2002 14:31 PDT

Here's a document about accelerator effects:

http://cepa.newschool.edu/het/essays/capital/accelerator.htm

Let me know if you'd like further elaboration.

mmi-ga