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Christian Worldview Application Of Interest Rate Essay

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nterest Rates in the U.S Economy
The concept of interest rates is very frequent when talking about the US economy. An interest rate is the cost of borrowing money expressed as a percentage of the loan amount. It is the primary measure of how much return the lenders will get from lending their money. In this brief paper, I will discuss what this case study is about, how it is related to what we have been studying in Economics and what Christian Worldview applications it presents.
This case study focuses on the difference between the nominal and real interest rates. The nominal interest rate which is the stated interest rate on the loan often does not tell the whole story. Furthermore, the difference is due to inflation since the purchasing power …show more content…

It is undeniably true that the concept of nominal and real interest rates is critical in order for one to make a smart financial decision. Unfortunately, a big portion of the general public members are ignorant in regard to this matter. As a result, some lending institutions take advantage of their clueless clients. For example institutions could present to savers a 4% nominal interest rate when the real interest rate is -1%. In this particular case, people who have no knowledge of real interest rates would automatically consider the offer without considering inflation rates although it plays a key role in determining the real return. Therefore lending institutions often benefit from the public’s ignorance and make a fortune for themselves. However, this practice is not only ethically unacceptable, but also against the Bible. This can be seen in 1Timothy 6:9 as it says “But those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction. The institutions should provide detailed explanation to their clients instead of exploiting their lack of knowledge. Another Christian Worldview application presented in this case study is that the borrowers should be careful when borrowing for it could be tied to their freedom. This is mentioned in Provers 22:7 that “The rich rules over the poor, and the borrower is the slave of the lender.” In addition, the Bible calls believers to have no debt except to love one another, and this is expressed in Romans 13:8 which says “Owe no one anything, except to love each other, for the one who loves another has fulfilled the

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