Question

match the words with their definition.

a. the bank pays on the principal and the interest already earned
b. interest paid only on the principal
c. when you deposit money into a savings account

1. principal
2. simple interest
3. compound interest

Explanation:

Analyze definition of principal

The term "principal" refers to the original sum of money lent or invested into an account. In the context of the options, depositing money into a Savings Accounts represents the principal amount being placed. Thus, 1 matches with c.

Analyze definition of simple interest

Simple interest is calculated solely as a percentage of the original principal amount. This matches definition b: "Interest paid only on the principal". Thus, 2 matches with b.

Analyze definition of compound interest

Compound interest is calculated on the initial principal and also on the accumulated interest of previous periods. This matches definition a: "The bank pays on the principal and the interest already earned". Thus, 3 matches with a.

Answer:

Word	Definition
2. Simple interest	b. Interest paid only on the principal
3. Compound interest	a. The bank pays on the principal and the interest already earned