Series

Abstract

This chapter covers some basic applications of series in economics and business studies, mainly in the areas of interest rates and finance, but also extended to exponential and logarithmic functions. We start with the idea of a progression. This is a number of terms arranged in a definite order and for which there is a pattern or rule which allows further terms to be identified. For example:

100, 101, 102, 103, 104,…

1, 10, 100, 1000, 10000,…

0, 100, 100, 200, 400,…

are all progressions. In the first example 100 is the first term or initial term and each subsequent term is obtained by adding 1 to the previous term. In the second example, 1 is the first term and each subsequent term is obtained by multiplying the previous term by 10. In the third example the first term is 0, the second term 100, and each subsequent term is obtained by adding together all the previous terms, so that 0 + 100 = 100, 0 + 100 + 100 = 200, 0 + 100 + 100 + 200 = 400, and so on.