What does the term "price of money" refer to?

The term "price of money" refers specifically to an interest rate. This reflects the cost of borrowing money or the return on investment for lending money. When you think of money as a commodity, the interest rate serves as its price in financial markets.

Interest rates determine how much borrowers will pay to use someone else's money and how much lenders will earn from loaning their funds. In economic terms, when the interest rates are high, the cost of borrowing increases, which can lead to reduced spending and investment, while lower interest rates typically stimulate borrowing and spending.

The other options, while related concepts in finance, do not represent the "price of money" in the same way. Fixed costs refer to business expenses that do not change with the level of goods or services produced, an exchange rate refers to the value of one currency in terms of another, and a capitalization rate typically pertains to valuing an income-generating property and isn't related to borrowing or lending costs directly. Thus, interest rates are the most accurate representation of the "price of money."