What are interest rates?
For all you people out there who don’t know what the interest rate is, it is in simplest terms, the price paid for using money, the price which represents the cost of finance or the price of money that is borrowed or saved. Like other prices, interest rates are determined by the forces of supply and demand. ... There is actually no individual interest rate in the economy, but rather a variety of rates across the financial sector depicting prices (costs) of various borrowing and loaning services over diverse periods.
What does interest rates do?
Interest rates motivate the borrowing and saving of business investors, consumers, and government agencies. You are probably unfamiliar with interest rates until you go to borrow money for such things as vehicles or houses.
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