Which term describes the amount a borrower must pay to a lender for the use of money, usually expressed as a percentage of the amount borrowed?

• A. Interest rate
• B. Recession
• C. Unemployment
• D. Participation rate

Answer: (A)

The cost of borrowing money is the interest rate. It’s the price a borrower pays a lender for using funds, usually shown as a percentage of the loan principal per year. This rate determines how large the repayments will be over time and can be fixed for a period or move with market rates. In everyday financial terms, a higher interest rate means more interest paid and slower growth of how much you owe, while a lower rate means cheaper borrowing. The other terms describe different things: a recession is a period of falling economic activity, unemployment is the share of people without work, and the participation rate is the portion of the working-age population that is either employed or actively seeking work.