Question

Why do interest rates on loans tend to be lower in a weak economy than in a strong one?
a.
A weak economy tends to have low inflation, so interest rates drop to match.
b.
Borrowers in a weak economy are less likely to default on their loans, so interest rates are correspondingly low.
c.
In a weak economy there is less demand for credit, so the price drops.
d.
The strength or weakness of an economy is determined by interest rates; low interest rates actually cause a weak economy.

Answer 1

Answer:

The answer is C on Edg 2020

Step-by-step explanation:

Answer 2

The reason why interest rates lend to be lower in a weak economy is in a weak economy there is less demand for credit, so the price drops.

What are interest rates?

Interest rates are the cost of borrowing. It can be described as the cost of borrowing funds. When the economy is weak, there would less demand for credit, as a result there would a drop in interest rates. When the economy is strong, there would be more demand for credit, as a result there would a rise in interest rates.

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