This problem also uses the data in Table 16-1. Table 16-1 Workings of the Accelerator Hypothesis of
Question:
Table 16-1 Workings of the Accelerator Hypothesis of Investment for the Hypothetical Mammoth Electric Company
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(a) What would expected sales have to be in periods 3 to 5 for net investment to be constant at 4.0?
(b) What would actual sales have to be in periods 3 to 5 to achieve a constant level of net investment?
(c) What would actual sales have to be in periods 2 to 4 to achieve a steady 20 percent increase in gross investment in each of the periods 3 to 5?
(d) At what rate do actual sales increase in part c?
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