Recall Application 2, "Rising Interest Rates During an Economic Recovery," to answer the following questions:
-According to the application, a recovering economy (and hence, a higher income) is usually associated with higher interest rates because:

Question

Quizplus · Accepted Answer

As income rises during an economic recovery, people tend to have more money available to save or invest, leading to a higher demand for money. This increased demand for money results in higher interest rates as lenders can charge more for the use of their funds.