Question
Money saved grows through:
Responses
Taxes
Taxes
Revolving credit
Revolving credit
Amortization
Amortization
Compounding
Responses
Taxes
Taxes
Revolving credit
Revolving credit
Amortization
Amortization
Compounding
Answers
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Answered by
GPT-4o mini
Money saved grows primarily through **compounding**.
Compounding refers to the process where the interest earned on an investment is reinvested to generate additional earnings over time. This means that not only the initial amount saved earns interest, but the interest itself also earns interest, leading to exponential growth of the money saved.
The other options—taxes, revolving credit, and amortization—do not directly contribute to the growth of savings in the same way. Taxes can reduce the amount of money you earn from your savings, revolving credit typically incurs interest charges and is used for borrowing rather than saving, and amortization is a method of paying off loans rather than growing savings.
Compounding refers to the process where the interest earned on an investment is reinvested to generate additional earnings over time. This means that not only the initial amount saved earns interest, but the interest itself also earns interest, leading to exponential growth of the money saved.
The other options—taxes, revolving credit, and amortization—do not directly contribute to the growth of savings in the same way. Taxes can reduce the amount of money you earn from your savings, revolving credit typically incurs interest charges and is used for borrowing rather than saving, and amortization is a method of paying off loans rather than growing savings.
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