Question

Grace got a loan of $500 from her bank, and she had to repay it with $550. Which term describes the extra money Grace had to pay?

A. principal
B. Interest
C. annual percentage rate

Answer 1

B. Interest
Because the bank has to charge a certain amount for loaning out the money

Answer 2

Letter B. Interest.

Step-by-step explanation:

Interest is the reward paid to deficits by surpluses. That is, it is the income that is charged to borrow money. Thus, the extra money of $ 50 is the interest that Greece should pay for loans to those who save (surpluses), that is, those who postpone consumption.