Which of the Following Is Implied by the Compounding of Economic

question 45

Multiple Choice

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

• A)A large increase in investment today has little effect on national income over the long run.
• B)Small changes in sustained growth rates can have a significant impact on national income over several decades.
• C)Consumers should not save,given the low real returns that compounding produces.
• D)A 10% annual rate of return will double an investment in less than 6 years.
• E)A 2% annual growth rate of GDP will double national income in 27 years.