- [[rule of 72]], [[continuous compounding]], [[half-life model]], [[exponential function]] # Idea ![[Pasted image 20210519095917.png]] They are not the same as [[tipping point models]]. ## Interest rates and [[growth domestic product|GDP]] If you get 10% interest on your principal of USD 100, how much do you make after $3$ years? $100 (1 + 0.1) = 110$ $110 (1 + 0.1) = 121$ $121 (1 + 0.1) = 133.10$ In other words, $100 (1 + 0.1)(1 + 0.1)(1 + 0.1) = 133.10$ More generally, $X(1 + rate)(1 + rate)(1 + rate)$ $X(1 + 1.1)^t$ $X(1 + rate)^t$ As growth rate decreases (approaches 0), we get the exponential equation. See [[continuous compounding]]. # References - https://www.coursera.org/learn/model-thinking/lecture/oLCWY/exponential-growth