What are the relationships among capital, interest rates, and interest income?

What will be an ideal response?

Businesses can either lease capital goods (for example, equipment) to produce products or purchase the capital goods. If they decide to purchase the capital goods, then they often need to borrow the money to make this purchase. The borrowed funds typically come from households who are willing to lend money through the banking system. In return for lending this money households earn interest income. The amount of interest income is determined by the interest rate. This interest rate will be equivalent to the rate charged to lease the capital goods.