A change in the growth rate of a country of one percentage point annually has
A) very little impact on the economy of a country.
B) a large impact in the future due to compounding.
C) a small impact in the current year, and smaller impact in the future because of compounding.
D) a large impact on the economy in the current year, but not in the future.

Question

Quizplus · Accepted Answer

A change in the growth rate of a country of one percentage point annually can have a significant impact in the future due to compounding. For example, a 1% increase in the annual growth rate of a country's GDP would result in a doubling of GDP in approximately 70 years. Therefore, even small changes in growth rates can result in large differences in economic outcomes over time.

A Change in the Growth Rate of a Country of One