3. The rate of interest is

a. the marginal revenue product of capital.

b. the price of loanable funds, expressed as an annual percentage return on a dollar of loanable funds.

c. the difference between the cost of borrowing and the cost of lending a dollar of loanable funds.

d. the difference between the marginal revenue product of capital and the marginal physical product of capital.

e. the charge or penalty firms pay to banks for having failed to meet their loan obligations to the bank.