By Hom Nath Gaire In the business of borrowing and lending money, the lender charges and the borrower agrees to pay an amount in excess of the amount lend and borrowed. The excess amount is called interest, in common language. In economic terminology, like rent and wages, interest is a factor payment. It is paid for the use of capital as a factor of production. In other words, interest rate is the cost of capital per unit of time. Economists define interest as a payment for the sacrifice made by the income holder by deferring consumption for the time being and imparting with liquidity, a reward to the income holder for their savings. Interest rates are indeed very important economic variables. There are many uses of interest rates. Use of Interest Rates · To indicate the liquidity conditions in the financial markets. · They are indicators of expectations about inflation. If the long term interest rates...