Share This Article:

Economic Definition of interest rate. Defined.

Offline Version: PDF

Term interest rate Definition: The price of funds expressed as a percentage of the total amount loaned or borrowed. This is the cost of borrowing funds and the payment received for lending. Interest rates are invariably expressed as an annual percentage of the amount borrowed/loaned. A 10 percent interest rate, to run through an easy example, tells us that the cost of borrowing $1,000 for one year is $100.


« interest | aggregate demand determinant interest rates »


Alphabetical Reference to Over 2,000 Economic Terms