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# Explain how the accelerator process is likely to affect economic growth
- URL: https://www.a-level-economics-tutor.com/explain-how-the-accelerator-process-is-likely-to-affect-economic-growth/
- Published: 2026-09-05T12:19:52.000Z
- Updated: 2026-09-05T12:19:52.000Z
- Author: Jaisul Naik
- Tags: AQA 10 mark question

### [AQA AS-Level Economics Paper 2 June 2019 Insert](https://www.a-level-economics-tutor.com/content/files/2026/03/AQA-AS-Level-Economics-Paper-2-Insert-June-2019-1.pdf?ref=a-level-economics-tutor.com)

**Extract F (lines 8–10) states: ‘Hopefully, firms will feel encouraged by the increases in demand and output, and, according to the accelerator process, this should have positive effects on investment.’ Explain how the accelerator process is likely to affect economic growth. (10 marks)**

The accelerator theory suggests that when the rate of economic growth increases, investment increases by an even greater proportion. Economic growth occurs when there is an increase in real GDP. Real GDP is the value of goods and services produced in the economy in a year, adjusted for inflation. 

Economic growth leads to greater investment, and this accelerator process leads to further economic growth. For example, the diagram below shows that aggregate demand (AD) first increases from AD1 to AD2\. As this occurs, firms need to produce a greater value of goods and services, as shown by the increase in real GDP from y1 to y2\. Firms expect to move closer to full capacity, so they increase spending on capital goods to maximise profits. As the economy grows, rising profits and business confidence make firms even more likely to invest. Some firms may also invest simply due to herd behaviour and animal spirits.

Therefore, as investment increases, AD increases even further, as investment is a component of AD (C+I+G+X-M). Therefore, the economy grows to y3\. This is also an example of a multiplier effect where an initial increase in AD leads to further increases in AD.

![](https://storage.ghost.io/c/c4/66/c466eade-2ad5-4613-8010-7a8ffa8c352f/content/images/2026/09/image-4.png)

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