Which term is used in business to show average rates of growth?

The geometric mean is the correct term used in business to indicate average rates of growth, especially when dealing with percentages or ratios over time. This measure is particularly useful in financial contexts, such as calculating average growth rates of investments or economic indicators. It takes into account the compounding effect, providing a more accurate representation of growth when the data consists of multiple values that vary significantly.

Using the geometric mean allows for the calculation of growth that accurately reflects the effect of sequential growth rates, as opposed to simply averaging them, which could misrepresent the overall performance. In essence, the geometric mean yields a value that is central to a set of numbers where those numbers are intended to be multiplied together or are exponential in nature, making it ideal for assessing growth rates.