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What is an interest rate? Select one answer - Edexcel - GCSE Business - Question 1 - 2017 - Paper 1
Question 1
What is an interest rate? Select one answer. A. Goods and services bought from other countries B. The value of one currency in terms of another C. The use of tax... show full transcript
Worked Solution & Example Answer:What is an interest rate? Select one answer - Edexcel - GCSE Business - Question 1 - 2017 - Paper 1
Step 1
What is an interest rate?
Answer
An interest rate is defined as the cost of borrowing money or the return received on savings. In simpler terms, it represents the percentage of the principal amount charged by lenders to borrowers, as well as the amount earned on deposited funds in a bank. Generally, this rate reflects the risk associated with the loan and the inflation rate within the economy.