ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on principal plus interest.

Detailed explanation-2: -True, Amount = Principal + Simple Interest. Principal amount is defined as the initial amount which is invested. The amount is defined as the sum of the principal amount and the interest earned during the investment period. Hence, it is said that Amount = Principal + Simple Interest.

Detailed explanation-3: -The principal is the amount of money you borrowed, while the interest is the cost of borrowing the money. Your interest rate will determine how much interest you pay over the life of the loan. The higher your interest rate, the more you’ll pay in interest.

Detailed explanation-4: -The borrowed money which is given for a specific period is called the principal. The extra amount which is paid back to the lender for using the money is called the interest. You calculate the simple interest by multiplying the principal amount by the number of periods and the interest rate.