Answers EA Academy Civics 9 Globalization and International Trade — Unit testQuestion 23

23

QuizMultiple Choice

Globalization and International Trade — Unit test

Question 23 • EA Academy Civics 9

What is the best definition of an interest rate?

Answer

A

the money that a bank pays as interest to depositors on their savings accounts

B

the percentage that compares a bank’s deposits to its loans in a given period of time

C

the total amount that a bank branch can provide to borrowers as a business or personal loan

D

the percentage that compares the amount of interest paid to a bank to the amount given as a loan

Explanation

An interest rate is the cost of borrowing money, expressed as a percentage of the amount borrowed. For example, if a borrower pays $5 in interest on a $100 loan, the interest rate is 5%. Choice D describes this comparison; choice A describes one way interest may be paid, not the rate itself.

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