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71. with dilferent values of a (propensity to consume) and p (accelerator coefficient), samuelson in his theory of business cycles clafmed that there will be ex
71. With dilferent values of a (propensity to consume) and p (accelerator coefficient), Samuelson in his theory of business cycles clafmed that there will be explosive cycles for the following values of a and B (1) a= 0 5 and B = 0 (2) a = 0.6 and B =2 (3) a = 0-5 and B =1 (4) a = O 8 and B =4
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Nidhi taparia Best Answer
Option (2) is right. Samuelson used various combinations of values of marginal propensity to consume and accelerator. One of these was when mpc = 0.6 and accelerator = 2. This produces explosive cycles that keep spreading excessively without reducing, or are explosive in nature.