If you plotted the future value of $1,000 growing at any interest rate greater than 0 with dollars on the vertical axis and time on the horizontal axis, the resulting curve would
A) slope upward at a constant rate.
B) eventually become parallel to the horizontal axis.
C) slope upward at a decreasing rate.
D) slope upward at an increasing rate.

Question

Quizplus · Accepted Answer

The future value of $1,000 growing at any positive interest rate, when plotted with dollars on the vertical axis and time on the horizontal axis, results in a curve that slopes upward at an increasing rate. This is because the interest earned in each period is added to the principal, which then earns interest in the next period, a process known as compounding. This compounding effect causes the growth rate of the investment to accelerate over time, hence the curve slopes upward at an increasing rate.

If You Plotted the Future Value of $1,000 Growing at Any