A small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to the effects of
A) the money supply.
B) compounding.
C) regression towards the mean.
D) averaging.

Question

Quizplus · Accepted Answer

Compounding is the process by which growth builds upon itself, resulting in a larger increase over time. Therefore, a small increase in the annual rate of economic growth can lead to a larger increase in growth over time due to compounding.

A Small Increase in the Annual Rate of Economic Growth