Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter4: Going Into Debt
Section4.4: Government Regulation Of Credit
Problem 4R
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Question
Why do the creditors generally charge higher interest rates on new borrowing?
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Step 1
The interest rate is the amount that the creditor charges with the principal from the borrower to his money or asset.
The interest rate is not the same for everyone or every borrowing. The interest rate depends on the number of factors such as the risk involved with borrowing, profit motive and the use of borrowing.
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