Which of the following is NOT a reason why a dollar today is worth more than a dollar in the future?
A) Inflation reduces the purchasing power of future dollars.
B) The value of a dollar in the future will be compounded more than the value of a dollar today.
C) There is more uncertainty of receiving dollars further into the future.
D) A dollar today can be productively invested in the time before receiving a dollar in the future.

Question

Quizplus · Accepted Answer

This statement is actually the opposite of the truth- the value of a dollar in the future will be LESS than the value of a dollar today due to inflation and other factors, not more. A) is true because inflation reduces the purchasing power of future dollars. C) is true because there is greater uncertainty looking further into the future. D) is true because a dollar today can be invested and earn interest, increasing its value over time.

Which of the Following Is NOT a Reason Why a Dollar