Question

Interest can be regarded as the Group of answer choices
a. dollar amount of loanable funds that a person borrows to invest in a capital good.
b. rate that a lender receives for the use of the lender's loanable funds.
c. payment to entrepreneurs for incurring risk in the production of new goods.
d. return earned by capital as an input in the production process.

Answer 1

Answer:

Option (b) is correct.

Explanation:

Interest refers to the amount of money that a lender can earn on giving the loans to the borrowers. Borrower is a person who is liable to pay the interest on the borrowing amount.

Normally, a person is borrowing money or funds from the lender for making investment in a certain types of capital goods.

Interest rate refers to the rate at which lender lends its loanable funds to the borrowers.