ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Interest is the monetary charge for the privilege of borrowing money. Interest expense or revenue is often expressed as a dollar amount, while the interest rate used to calculate interest is typically expressed as an annual percentage rate (APR).

Detailed explanation-2: -Interest Rate This is a percentage of the loan amount that you’re charged for borrowing money. It is a re-occurring fee that you’re required to repay, in addition to the principal. The interest rate is always recorded in the promissory note.

Detailed explanation-3: -Principal: This is the original amount of money that is being borrowed. Loan Term: The amount of time that the borrower has to repay the loan.

Detailed explanation-4: -Credit allows you to get money upfront with the promise to repay it in the future, often with interest. Creditworthiness refers to a borrower’s ability to pay what they’ve borrowed. Lenders judge creditworthiness in many different ways, and they may use things like credit reports and credit scores to help.

Detailed explanation-5: -What are the Different Types of Interest? The three types of interest include simple (regular) interest, accrued interest, and compounding interest. When money is borrowed, usually through the means of a loan, the borrower is required to pay the interest agreed upon by the two parties.