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Unformatted text preview: Your money will purchase less one year from now than it would today. Prices of commodities will increase due to inflation. What cost $100 today, will cost $110 a year from now due to 10 percent inflation. Therefore, it will take more of your mattress money to purchase items one year from now than it would if you purchased those items today. If you deposit your money in the bank, the interest you receive will generally compensate you for inflation as well. The cost of holding mattress money is known as the opportunity cost of holding money. 6...
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.
- Fall '10