Question

An investment is worth one

dollar and earns a 100%
return in year 2, for a total of
one dollar in returns. In year 3,
the investment earns the same
100% return but has a total of
two dollars in returns. This is
an example of what?
A. Linear growth
B. Limited returns
C. Guaranteed returns
D. Exponential growth

Answer 1

The scenario demonstrates exponential growth as the investment value increases exponentially with a 100% return each year.

Step-by-step explanation:

The given scenario exhibits exponential growth. In year 2, the investment earns a 100% return, doubling its value to two dollars. In year 3, the same 100% return leads to a total of four dollars in returns. Each year, the returns increase exponentially as the investment amount is multiplied by the return percentage.

Learn more about Exponential growth