According to the Constant Growth Rate Rule, If a Variable $y _ { t } = y _ { 0 } ( 1 + \bar { g } ) ^ { t }$

question 46

Multiple Choice

According to the constant growth rate rule, if a variable starts at some initial value y₀ at t = 0 and grows at $y _ { t } = y _ { 0 } ( 1 + \bar { g } ) ^ { t }$ at a constant rate $\bar { g } ,$
Then the value of the variable in three periods is given by:

• A) \(y _ { 3 } = y _ { 0 } ( 1 - \bar { g } ) ^ { 3 }\)
• B) \(y _ { t } = y _ { 0 } ( 1 + \bar { g } ) ^ { t }\)
• C) \(y _ { 3 } = y _ { 0 } ( 1 + \bar { g } ) ^ { 3 }\)
• D) \(y _ { 3 } = y _ { 0 } ( 1 + 3 \bar { g } )\)
• E) \(y _ { 3 } = 3 y _ { 0 } ( 1 - \bar { g } )\)

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