How does inflation impact the time value of money?

Answer 1

When you have inflation, then one hundred dollars today, if kept in your pocket, will be worth less in a year (and less in more years as inflation remains). Prices of everything go up in inflation, so you can buy less with the money you have now. If you invest your money, bank or elsewhere, then you will have to compare how much your money is growing with how much the infkation rate is. If inflation is at 3%, and your money is growing at 5%, then you're ahead. You can do more with youor money later in time than today. But if your money only grew at 2%, while inflation went up by 3%, you're poorer when you cash in on your investment.

Answer 2

the first is watching money become less valuable so that the purchasing power of each dollar, or pound sterling, or yen buys less goods than it did int he past. It is as if the purchasing power went up in smoke. the major effect of inflation is that a nation's nominal currency loses value. That is, it takes more Dollars, or Pounds Sterling, or Euros, or Yen, or Swiss Francs, to buy the same quantity of goods. Inflation Transfers Money from Savers and Investors to Debtors

Answer 3

By inflation you end up paying more for the same volume of produce. Otherwise the same would have gone more products. Naturally erodes the time value of money.
Ramachandran V.

Answer 4

Hi, if theres inflation then the value of money goes down.

Answer 5

because commodities get more expensive by time because of inflation, eventually causing in the same time money to lose some of its value.