1. Interest rate refers to the ratio of interest amount to borrowed funds (principal) in a certain period. Interest rate is the main factor that determines the capital cost of enterprises, and it is also the decisive factor for enterprises to raise funds and invest. To study the financial environment, we must pay attention to the current situation and changing trend of interest rates.
2. Interest rate refers to the ratio of the interest amount due in each period to the par value of the borrowed, deposited or lent amount (called the total principal). The total interest of the lent or borrowed amount depends on the total principal, interest rate, compound interest frequency and the length of time of lending, deposit or borrowing. Interest rate is the price that the borrower needs to pay for the money borrowed, and it is also the return that the lender gets by delaying his own consumption and lending it to the borrower. The interest rate is usually calculated by the percentage of one-year interest to the principal.
Third, in the modern economy, interest rate, as the price of capital, is not only restricted by many factors in the economic society, but also has a great influence on the whole economy. Therefore, modern economists pay special attention to the relationship between various variables and the balance of the whole economy when studying the decision of interest rate. Interest rate determination theory has also experienced the evolution and development of classical interest rate theory, Keynesian interest rate theory, loanable funds interest rate theory, IS-LM interest rate analysis and contemporary dynamic interest rate model.
Fourth, Keynes believed that savings and investment are two interdependent variables, not two independent variables. Keynes regarded interest rate as an exogenous variable without interest rate elasticity, in which the money supply was controlled by the central bank. At this time, the demand for money depends on people's psychological "liquidity preference".
5. In terms of expression, interest rate refers to the ratio of the amount of interest to the total amount of borrowed capital in a certain period. Interest rate is the interest level of unit currency in unit time, indicating the amount of interest. Economists have been trying to find a set of theories that can fully explain the structure and changes of interest rates. Interest rates are usually controlled by the national central bank and managed by the US Federal Reserve. So far, all countries regard interest rate as one of the important tools of macro-control.