Discussion
Comparing an arithmetic with a geometric gradient for escalating costs, the geometric form is the better model when costs rise with
Answer: B
Correct answer: inflation, as a constant percentage
A geometric gradient models a constant proportional increase, which is exactly what a general inflation rate is: each year’s cost is a fixed multiple of the last. A cost rising by a constant absolute amount - a maintenance charge growing by 500 a year with wear - is an arithmetic gradient instead.
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