Problema Solution
If the national economy shrank at an annual rate of 7% per year for three consecutive years, then the economy shrank by 21% over the three-year period. Is this statement true or false? If false, what did the economy shrink by over the three-year period?
Answer provided by our tutors
Its not true since in 3 consecutive years the economy will shrink by:
0.07 + 0.07*0.07 + 0.07*0.07*0.07 = 0.075243 or 7.52% and that is different then 0.21 or 21%