Question

4.1 Measuring Interest Rates 1) The concept of ________ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today. A) present value B) future value C) interest D) deflation

Answer 1

The correct answer is letter "A": present value.

Step-by-step explanation:

The Present Value of Money concept states that it is better to have a dollar today than a dollar tomorrow. This happens because having money today implies it can be deposited in a bank account to benefit from the interest rate or invest it so at a certain point in time the same amount of money will have a higher value.

Having the money available tomorrow may not provide the same returns as if the started to be invested yesterday.