The accelerator effect posits that an increase in GDP growth will cause a proportionally larger increase in investment spending. For example, a 3% increase in GDP growth will result in investment rising by more than 3%. Conversely, a fall in GDP growth will lead to a more than proportional fall in investment.
The underlying idea behind the accelerator effect is the relationship between GDP growth and investment. As GDP growth increases, income and consumption increases, more goods must be produced, more capital is needed to produce these additional goods and, therefore investment increases.