Question

The ________________ recognizes that a dollar today is worth more than a dollar a year from now if for no other reason than you could put the dollar in a bank today and have more than a dollar a year from now.

Answer 1

Answer: Inflation and Positive interest rates.

Explanation:

If a dollar today is worth more than tomorrow, this is primarily due to the inflation and positive interest rate in an economy. Suppose there is a further increase in the inflation rate in the near future, so the quantity of goods which I am buying today from the given $10 is more the quantity of goods which I will get in the future.

This clearly shows that the value of dollar decreases because of inflation rate. If a country is having negative inflation and negative interest rate then this will not be the case. In this case, the value of dollar improves.