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.

the answer is C on E2020.

Step-by-step explanation:

In a weak economy there is less demand for credit, so the price drops.

Step-by-step explanation:

A weak economy can be defined as an economy which has a very low industrial base , very low industrialization, very low GDP , economically poor etc.

So, in a weak economy, there are very few people who take loans because they don't have enough money to pay off their loans. So, the interest rates are relatively low. When the demand is low, the rate is low too.

Hence, option C - In a weak economy there is less demand for credit, so the price drops. - is the right answer.

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step-by-step explanation:

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