Financial accelerator

A financial accelerator is a type of theory that explains how changes in an economy can cause a cycle of change. The idea is that when one part of an economy goes up or down, it can cause other related parts to also go up or down. For example, if people spend a lot of money in one area, it can cause businesses and people in other areas to also spend more money, which can cause even more people and businesses to spend even more money. This chain reaction can cause the entire economy to grow or shrink.