Why is the demand to borrow positively related to the rate of economic growth?
A) Lenders obtain additional wealth.
B) It provides motivation to keep spending to a minimum.
C) The incentive to invest is enhanced by economic growth.
D) It increases the opportunity cost of borrowing.

Question

Quizplus · Accepted Answer

Economic growth leads to higher returns on investments, thereby creating an incentive to invest. This, in turn, leads to a positive relationship between economic growth and demand for borrowing, as borrowers would require funds to invest in these opportunities.

Why Is the Demand to Borrow Positively Related to the Rate