According to the neoclassical model, which is based on an analysis of the marginal costs and benefits to a firm of acquiring additional capital goods, investment spending by firms depends primarily on two factors: first, the projected growth in business output, as determined by final demand, and, second, the cost of acquiring and using capital goods, the so-called user cost of capital.
Higher projected output growth naturally leads firms to expand their capacity to produce by investing in new capital goods. This relationship between the rate of growth of demand and the level of investment spending, dubbed the accelerator effect, is a venerable and empirically well-supported relationship in economics.