Question

what is simple interest in terms of economics? group of answer choices something that you are interested in that is easy to do. when interest is charged to the initial sum and previously accumulated interest. the practice of charging an interest rate only to an initial sum. interest that is calculated by the division of the effective interest and the rate of return.

Answer 1

Simple interest in economics refers to charging interest only on the initial sum borrowed or invested without considering previously accumulated interest. The formula for calculating simple interest is Principal x Interest Rate x Time.

Step-by-step explanation:

Simple interest, in terms of economics, refers to the practice of charging an interest rate only on the initial sum of money borrowed or invested. It does not take into account any previously accumulated interest. The formula for calculating simple interest is:

Simple Interest = Principal x Interest Rate x Time

For example, if you borrow $1,000 at an annual interest rate of 5% for 2 years, the simple interest would be calculated as follows:

Simple Interest = $1,000 x 0.05 x 2 = $100

So, the borrower would owe a total of $1,100 after 2 years.