What does the term 'Interest Rates' refer to?

The term 'Interest Rates' refers to the cost of borrowing money or the return on savings, which perfectly aligns with the definition given in the first choice. When a bank lends money to a borrower, it charges an interest rate, which is the percentage of the loan amount that the borrower must repay in addition to the principal amount. This is considered the charge placed on borrowers. Conversely, when individuals save money in a bank, they earn interest, making this the reward given to savers. Therefore, interest rates represent the balance between the cost incurred by borrowers and the compensation received by savers, reflecting the cost of money in the economy. This definition is crucial for understanding how financial transactions work, the impact on consumers and businesses, and the overall functioning of the economy.

The other options do not accurately capture the meaning of interest rates within the context of finance and economics. For example, the second choice discusses pricing strategies of businesses, while the third relates to the financial securities market, and the fourth involves price increases in goods and services, none of which pertains directly to the concept of interest rates.