ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Interest is the monetary charge for borrowing money-generally expressed as a percentage, such as an annual percentage rate (APR). Interest may be earned by lenders for the use of their funds or paid by borrowers for the use of those funds.

Detailed explanation-2: -Interest rate / Annual Percentage Rate (APR) The APR is the amount of annual interest plus fees you’ll pay averaged over the full term of the loan. Focusing on the APR allows you to better compare the cost of borrowing from different lenders, who may all have different fee structures.

Detailed explanation-3: -Compound Interest Compounding interest essentially means “interest on interest.” The interest payments change each period instead of staying fixed. Simple interest is based solely on the principal outstanding, whereas compound interest uses the principal and the previously earned interest.

Detailed explanation-4: -Interest is the extra money paid by the borrower to the lender.