Small Differences in Annual Growth Rates of Real GDP Generate

question 40

Multiple Choice

Small differences in annual growth rates of real GDP generate large differences in real GDP over time because of the:

• A)importance of average labor productivity.
• B)power of compound interest.
• C)diminishing returns to capital.
• D)limits of economic growth.

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Definitions:

Interest-Bearing Note

A debt instrument that pays interest to the holder until its maturity date.

Issuance of Note

The act of creating a promissory note by which a borrower agrees to pay back a lender according to set terms.

Discounted Note

A promissory note whose proceeds are less than its face value due to interest being deducted in advance.

Cash Proceeds

The total cash received from transactions, such as the sale of an asset or the issuance of shares.