Economics - Exponential and Logarithmic Functions : Rule of 70
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The rule-of-70 provides a simple way to calculate the approximate number of years it takes for the level of a variable growing at a constant rate to double. The rule states that if the constant growth rate is r, the variable will double after approximately n years when n = 70/ r.
a) Explain how this rule can be derived.
b) State and derive the corresponding rule-of-x, the approximate number of years it takes for a variable growing at a constant rate to treble.
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Solution Summary
The rule-of-70 is investigated. The exponential and logarithmic functions in economics is examined. Constant growth rates which rule states are determined.
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Question: The Rule-of-70 (Exponential and Logarithmic functions)
The rule-of-70 provides a simple way to calculate the approximate number of years it takes for the level of a variable growing at a constant rate to double. The rule states that if the constant growth rate is r, the ...
Purchase this Solution
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