Excuse the weird title, but I think a. Example should make it clearer, when people say: person A had money in 1900, say 100,000$, that is equal to 1,000,000$ in todays money?
How does that work?
Or what do they mean exactly?
Like if my Great grandfather had 1 million that remained untouched till this day shouldn’t that 1 million remain as a 1 million even today?
In: Economics
In general, money loses buying power over time. This is called inflation.
> Example should make it clearer, when people say: person A had money in 1900, say 100,000$, that is equal to 1,000,000$ in todays money?
In this example, the work needed to get 100,000$ in 1900 would be equivalent to the work to get 1,000,000$ today. Or in other words, the buying power of 100,000$ in 1900 would be equivalent to the buying power of 1,000,000$ today.
> Like if my Great grandfather had 1 million that remained untouched till this day shouldn’t that 1 million remain as a 1 million even today?
Yes, but what your grandfather could buy with 1 million is much more than what you can buy with the same million.
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