Countries are concerned about small changes in their average annual growth rates in per capita income because
A) growth rates tend to decline over time.
B) the power of compounding means small changes have large effects over time.
C) the faster a country grows today, the less it will be able to consume in the future.
D) growth rates are a factor in U.N. participation.

Question

Quizplus · Accepted Answer

The power of compounding means that even small changes in growth rates can have significant effects over time. For example, a growth rate of 2% per year may not seem like much, but over the course of 50 years, it would result in a more than doubling of per capita income. Therefore, countries are rightly concerned about small changes in their growth rates.

Countries Are Concerned About Small Changes in Their Average Annual