If our economy is growing at a constant rate of 5 percent per year, then over a period of 10 years we would expect to see which of the following?
A)nice, steady flat-line growth
B)an upward sloping growth path
C)a downward sloping growth path
D)It is impossible to say what kind of growth path we would see.

Question

Quizplus · Accepted Answer

A constant rate of growth of 5 percent per year would result in an upward sloping growth path over a period of 10 years, assuming no significant external shocks or recessions. This is because each year the economy would be growing by an additional 5 percent of the new, larger size, leading to a compounding effect of growth over time.

If Our Economy Is Growing at a Constant Rate of 5