710 B
710 B
Rate of Interest
Definition
The price paid for the use of borrowed capital, typically expressed as a percentage of the principal per year. This rate is determined by the balance between the supply of lendable capital and the demand for its use in productive enterprises.
Source Chapter
Book II, Chapter 4
Context
Smith provides a comprehensive analysis of how interest rates are determined, arguing that they naturally fall as the quantity of capital in a country increases and profitable employment opportunities become scarcer.
Economic Domain
Distribution