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: -When you take out a loan, lenders earn money by charging interest. In other words, interest is the price you pay for borrowing money from a lender. That means, when paying back the loan, you’ll pay the amount you borrowed plus an additional sum-which is the interest.

Detailed explanation-3: -’Lend’ means to give something to someone to be used for a period of time and then returned. ‘Borrow’ means to take and use something that belongs to someone else for a period of time and then return it. The person lending something owns it and is letting someone else use it.

Detailed explanation-4: -Interest payments are the cost of borrowing money. The borrower makes these payments in addition to paying back the principal on a loan. If you lend money with interest, the interest payment is the amount you are paid over and above the principal amount you lent.