Money has a time value because
A) inflation increases the value of money over time.
B) money earns interest over time.
C) monetary systems are more automated than in the past.
D) a dollar received today is worth more than a dollar received yesterday.

Question

Quizplus · Accepted Answer

Money has a time value because it can earn interest over time. This means that a dollar invested today can grow to be worth more in the future. In addition, inflation decreases the value of money over time, which further emphasizes the importance of understanding the time value of money. However, choice A is incorrect because inflation decreases the value of money over time, not increases it. Choice C is also incorrect because the automation of monetary systems does not necessarily relate to the time value of money. Choice D is partially correct but not as complete as choice B because a dollar received today is not necessarily worth more than a dollar received yesterday without considering the impact of time and interest.

Money Has a Time Value Because