answersLogoWhite
Investing and Financial Markets
Inflation

Does inflation have anything to do with making a dollar today?

484950

Top Answer
User Avatar
Wiki User
2005-11-12 19:34:28
2005-11-12 19:34:28

If I understand your question correctly, when dealing with inflation, a dollar earned today is worth more than a dollar earned at any time in the future. This has to do with the concept of the present value of money. Because inflation devalues the dollar over time, a dollar earned today is worth more than say, a dollar earned five years from now.

1

Related Questions

User Avatar

Of course it does. Inflation is the devaluing of money over time. It is always displayed as a percentage. For instance, inflation (usually measured as the Consumer Price Index) one year might be 3%. That means that a dollar in the current year would be worth $1.03 the year before. The saying is kind of misleading though. Inflation usually happens so slowly that a single dollar will not be actually worth less after a single day. Take the rate of inflation for the US since 1968, 519%. Divide that by the number of years since 1968 (40), it comes to 12.975%. Divide that by 365... it comes to .03%. So a dollar tomorrow is only worth .03% more than a dollar today if you apply the 40-year historical average (it is actually different because inflation right now is not 12.975%). While inflation makes one dollar today worth more than a dollar tomorrow, it (inflation) is not the only reason for that. Even if inflation is 0%, a dollar today is still worth more than a dollar tomorrow, for a couple of reasons like 1. if you can buy something today, you can enjoy it (one day) more than if you had bought it the next day 2. by investing a dollar today, you can earn interest, increasing the value of the dollar (in the US, the Fed does manage money supply and interest rates, so there will be some correlation between changes in inflation and changes in interest rates) 3. Perhaps, we will not be able to enjoy the worth of the dollar tomorrow.

User Avatar

One dollar was worth one dollar in 1978. Adjusting for inflation, a dollar in 1978 is about $3.50 today.

User Avatar

A dollar in 1860 would have the buying power of $28.90 in 2014 due to inflation.

User Avatar

Inflation will reduce purchasing power of a future dollar.

User Avatar

Inflation continues to drastically decrease the value of a dollar. One dollar in 1982 is only worth about 40 cents today.

User Avatar

A dollar from 1984 would be worth about $2.30 today. That is equivalent to a yearly inflation rate of 2.82 per year for a total inflation rate of 130.6 percent.

User Avatar

One dollar in 1968 was worth the same as $6.58 cents today. The dollar is no longer worth as much because of inflation.

User Avatar

Inflation destroys the purchasing power of a paper fiat currency such as the dollar. In practical terms this means that when inflation is high the same number of dollars today will buy a smaller amount of goods or services tomorrow.Decrease. Inflation is when more dollar bills are printed. When you have more of something, the value always decreases per each of the something.

User Avatar

there are two reasons. 1. A dollar today can earn interest so you will have more than a dollar in the future. 2. Inflation will reduce the purchasing power a dollar over time, so it's better to get the dollar today and spend it today because it won't buy as much stuff tomorrow.

User Avatar

In 1962 the value of a dollar was the same as $7.77 in today's time. This is caused by the annual inflation rate of 4.02 percent.

User Avatar

The value of $1 in 1935 was worth the equivalent of about $17.40 today. The increase is accounted for by inflation and other economic pressures.

User Avatar

Yes, this is VERY common knowledge - known as inflation. (or very rarely, deflation).

User Avatar

what is the current inflation rate in India today?as per today i.e 28-3-2009 the inflation rate is 0.27%

User Avatar

If you assume 3% per year inflation for the 60 years, 17 cents.

User Avatar

Inflation continues to drastically decrease the value of a dollar. What you could buy for dollar in 1858 would cost you $26.53, meaning that dollar would be worth about 4 cents in today's world.

User Avatar

$1. A dollar bill will always be worth $1. it may go down and you need to use a few $1 bills to equal one dollar, but it will always equal one dollar.

User Avatar

According to the Consumer Price Index Inflation Calculator, one dollar in 1930 had the same buying power that $13.50 has in 2011. So whatever you can get for thirteen and a half bucks today, was about a dollar in 1930.

User Avatar

Zimbabwean Dollar written Z$ to distinguish it from other dollar currencies. Because of massive inflation is was suspended 12th April 2009. Today, other currencies are used for transactions instead

User Avatar

If you hold your 1852 $1 gold piece, it would worth more than $100 today Inflation continues to drastically decrease the value of a dollar. What you could buy for dollar in 1852 would cost you $27.60, meaning that dollar would be worth about 4 cents in today's world.

User Avatar

Due to inflation rates, money from a century ago was worth much more for the same dollar amount today. $200 in 1915 would be the equivalent of $4,614 today.

User Avatar

If you'd like to know an "exact" approximation, try this site which calculates dollar value based on inflation: http://www.westegg.com/inflation/ Back a long time ago, money was worth more than it is today. Just getting a few dollars paw was considered a lot.

User Avatar

Inflation was fairly flat in the United States during most of the 1800s. A dollar from almost any time during that century would be have the purchasing power of about 4 cents today.

User Avatar

It varies from country to country

User Avatar

Based on the inflation rates over the last 50 years, what cost $1 in 1957 would cost $7.17 in 2006.

User Avatar

The dollar is, by definition, worth 100 cents. However, the value of the dollar changes over time due to inflation (or more rarely, deflation) and there are also different dollars in different countries, for example, the US dollar and the Canadian dollar, which do not have exactly the same value. If you are refering to the value of the coin's composite metals then please state it in the question.


Copyright © 2020 Multiply Media, LLC. All Rights Reserved. The material on this site can not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of Multiply.