ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Interest may be earned by lenders for the use of their funds or paid by borrowers for the use of those funds. Interest is often considered simple interest (based on the principal amount) or compound interest (based on principal and previously-earned interest).

Detailed explanation-2: -Interest is the price you pay to borrow money or the cost you charge to lend money. Interest is most often reflected as an annual percentage of the amount of a loan. This percentage is known as the interest rate on the loan.

Detailed explanation-3: -Lending (also known as “financing") occurs when someone allows another person to borrow something. Money, property, or another asset is given by the lender to the borrower, with the expectation that the borrower will either return the asset or repay the lender.

Detailed explanation-4: -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.