Oh the interest rate is the cost of
borrowing or the cost that one pays for the rental of fun
there are different types of interest rates in our lives mortgage interest
rates student loan rates interest rates on investment loans bonds etc interest
rates play an important role in the economy for a number of reasons if a person wants to buy a house and
interest rates are too high this could impede him or her from taking
action at the same time he might prefer depositing his savings in a bank because
they would earn him a high level of interest
a similar logic exist in the corporate world high borrowing rates impede firms
from investing in new projects as you can see interest rates have a strong
impact on the state of the economy it is also true that interest rates are
influenced by the economy during a period of stable growth people are less
concerned about depositing their money and similarly banks apply lower interest
rates associated with their loans when a crisis occurs everybody is much more
cautious and unwilling to lend their money which results in higher interest
rates understanding the dynamics that interest
rates have in different economic cycles is key for making informed and
successful financial decisions