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NARA [144]
2 years ago
11

Because of the compounding effect:

Business
1 answer:
luda_lava [24]2 years ago
6 0

Answer: c. small changes in economic growth rate lead to large GDP changes over time.

Explanation:

If there is even a small change in the rate at which the economy is growing, this increase will increase by even more the year afterward and then even more as time goes on. This is because the interest is being compounded overtime.

Look at the future value formula that shows compounding for instance:

Future value = Amount * (1 + rate) ^ number of periods

Assume even a change of 2% in the growth rate. In 30 years, this rate would have increased the economy by:

= 1 * ( 1 + 2%)³⁰

= 1.81

Which is a rate of:

= 1.81 - 1

= 81%

What started off as only 2% became 81% in 30 years. This is what compounding does.

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Sheldon has the following year-end account balances: Accounts Receivable, $5,000; Supplies, $12,000; Equipment, $18,000; Account
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the balance in the Cash account should be C : $25,000.

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Cash                       25.000

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Supllies                      12.000

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Assets                     60.000

 

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Liabilities              17.000

 

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Crusoe Waterworks Company provides plumbing services. Transactions of Crusoe Waterworks during the first year of operations are
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Answer:

$7,700

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