Illustrative model: a balance earns a fixed percentage of itself each period, and no money is withdrawn. What makes the modeled growth reinforcing?
Answer & explanation
A larger balance produces a larger addition, which further increases the balance.
The stock influences the amount added to itself, closing an amplifying loop. This simplified model omits constraints that could limit real growth. Its pattern explains compounding rather than guaranteeing unlimited expansion.
Thinking in systems
Chapter 2 · A Brief Visit to the Systems Zoo
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