Why do interest rates on loans tend to be higher in a strong economy than in a weak one?
a. credit markets increase in a strong economy, and with increased demand come increased prices.
b. a strong economy encourages borrowers to take out very long-term loans, which have higher interest rates.
c. credit is plentiful in a strong economy, so it is harder to build up the good credit rating necessary for a low interest rate.
d. people in a strong economy have more money, so they can afford more expensive loans.

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BigBossGloKing BigBossGloKing

Today at 5:59 PM
Mathematics

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Why do interest rates on loans tend to be higher in a strong economy than in a weak one?
a. credit markets increase in a strong economy, and with increased demand come increased prices.
b. a strong economy encourages borrowers to take out very long-term loans, which have higher interest rates.
c. credit is plentiful in a strong economy, so it is harder to build up the good credit rating necessary for a low interest rate.
d. people in a strong economy have more money, so they can afford more expensive loans.

Answer :

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chisnau chisnau · Answer 1 · 2025-04-02T18:04:08-04:00

A strong economy can be defined as an economy which has a strong industrial base, good shares prices, vast industrialization, high GDP etc.

A strong economy has high credit rates because when the demand is high, the prices are high. When the demand is less, the prices are less.

So, option A: credit markets increase in a strong economy, and with increased demand come increased prices. - is the correct answer.

Parrain Parrain · Answer 2 · 2025-04-02T18:04:28-04:00

Based on trends in strong economies, it is true that a. credit markets increase in a strong economy, and with increased demand come increased prices.

Why is credit high in strong economies?

There are more economic opportunities so more entities take on loans.
This increase in demand comes with higher rates.

The law of demand shows that when something is in high demand, the prices will increase. With the credit being high, its price - the interest - will increase.

In conclusion, option A is correct.

Find out more on law of demand at https://brainly.com/question/13704873.