Which of the following is implied by the compounding of economic growth rates?

Question

Quizplus · Accepted Answer

Compounding of economic growth rates refers to the idea that sustained small changes in economic growth rates can have a significant impact on national income over a long period of time. This is because of the compounding effect, where the growth rate builds on itself over time, leading to exponential growth. Therefore, option B is the correct answer. Option A is incorrect because a large increase in investment can have a significant impact on national income over the long run, but it may not be immediately noticeable due to the compounding effect. Option C is incorrect because consumers should save to benefit from the compounding effect, even though the real returns may be low. Option D is incorrect because it refers to the compounding effect of investment returns, not economic growth rates. Option E is incorrect because it implies that it takes 27 years for national income to double, but it does not take into account the initial starting point of national income.

Which of the Following Is Implied by the Compounding of Economic