The money interest rate is the percentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principal. The real interest rate reflects the actual burden on borrowers and the payoff to lenders after accounting for the impact of inflation. True or false?

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9 August, 08:40

The money interest rate is the percentage of the amount borrowed that must be paid to the lender in addition to the repayment of the principal. The real interest rate reflects the actual burden on borrowers and the payoff to lenders after accounting for the impact of inflation. True or false?

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Cordell Golden · Answer 1

The given statement is TRUE

Explanation:

When the modification is done in order to remove the results of inflation and to show the real cost of the amount or money that has been raised, or the real yield on the amount of money that is given by the lender is the real interest rate.

When the total amount inclusive of the principal amount that has been borrowed from the lender along with the interest on it is to be paid back, then such interest rate is known as the money interest rate.

Therefore, as per the given information in the question, the statement is TRUE.