ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The interest rate is the amount a lender charges a borrower and is a percentage of the principal-the amount loaned. The interest rate on a loan is typically noted on an annual basis known as the annual percentage rate (APR).

Detailed explanation-2: -There are two main parts of a loan: The principal–the money that you borrow. The interest–this is like paying rent on the money you borrow.

Detailed explanation-3: -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-4: -The federal funds rate is the interest rate banks charge each other to borrow funds, whereas the discount or bank rate is the rate the Federal Reserve charges commercial banks to borrow funds. A lowered discount rate correlates to lower rates paid on savings accounts.