In this article we will discuss about the innovation theory of business cycles. Also learn about its criticisms. Joseph Schumpeter offered his own explanation of trade cycles on the basis of the timing of major innovations in a capitalist system. He has suggested an explanation of the business cycle in items of innovations that take place in the economic system [...]
Show that the simultaneous operation of the multiplier and accelerator can cause income Auctions. Business conditions never remain unchanged. Prosperity may be followed by depression or a crash. Economic expansion yields place to recession, with consequent fall in national output or GNP, employment, and real incomes. Prices and profits may fall. People are thrown out of jobs and idle capacity [...]
The below mentioned article provides a note on super-multiplier. The term 'super-multiplier' was first coined by J.R. Hicks in his business cycle theory. The object was to show the relationship between change in induced investment and the corresponding change in income. To be more specific, it indicates the ratio between the two changes, i.e., in investment and in equilibrium output. [...]