Why do very small differences in annual growth rates amount to big differences in the degree of long-term economic growth?
A) because the faster-growing countries gain a political advantage over poorer countries, and use that advantage for their economic gain
B) because the annual growth rate is compounded over time
C) because the slower-growing countries save too much
D) because the slower-growing countries don't export enough

Question

Quizplus · Accepted Answer

When growth rates are compounded over time, even a small difference in growth rate can result in significant differences in economic output over the long term. For example, a country with a 2% annual growth rate will double its GDP in approximately 35 years, while a country with a 4% annual growth rate will double its GDP in just 17 years. This difference compounds over time and can have significant impacts on a country's overall economic well-being.

Why Do Very Small Differences in Annual Growth Rates Amount