Question

The Bitcoin economy had reported year-on-year growth from 2017 to 2019 at a yearly rate of 7%. In 2020 it went into a downward trend. That year the growth turned negative at -5%. If the negative growth doubled the next year, what was the approximate percentage increase or decrease of the bitcoin economy in that year, compared to 2018?

SELECT ONLY ONE
Approximately 9% decrease
Approximately 13% decrease
Approximately 3% increase
Approximately 5% increase

Answer 1

If the Bitcoin economy had a yearly growth rate of 7% from 2017 to 2019, then the value in 2019 would be $1.07^3 = $1.225. If the economy had a negative growth rate of 5% in 2020, then the value in 2020 would be $1.225 x 0.95 = $1.1638. If the negative growth rate doubled in the next year, then the value in the next year would be $1.1638 x 0.9 = $1.04742.

To calculate the percentage change from 2018 to the next year, we can compare the values of the Bitcoin economy in those two years. The value in 2018 would be $1.07^2 = $1.1449. The percentage change would be ((value in next year - value in 2018) / value in 2018) x 100%. Substituting the values, we get ((1.04742 - 1.1449) / 1.1449) x 100% = -8.5%.

Therefore, the approximate percentage decrease of the Bitcoin economy in the next year, compared to 2018, is approximately 9%. The closest option is "Approximately 9% decrease".