The Value of Money (theory)

The value of money refers to its ability to buy goods and services, which depends on factors like inflation, interest rates, and economic stability. Essentially, money's worth is determined by how much it is accepted and trusted in a given economy. When inflation rises, money loses value because prices increase, meaning you can buy less with the same amount. Conversely, stable and healthy economies strengthen money's value. Understanding this helps individuals and businesses make informed decisions about saving, spending, and investing based on how much their money is worth over time.