Fast-growing economies often have a greater demand for loanable funds than do slower-growing economies because fast-growing economies:

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Fast-growing economies have more investment opportunities, which require a greater demand for loanable funds to finance projects and expand businesses. This is because high rates of economic growth typically attract more investment, both domestic and foreign, leading to a higher demand for credit. A high private savings rate may lower the demand for loans, while a high public savings rate may make more funds available for investment, but these factors are not necessarily the main driver of increased demand for loanable funds in a fast-growing economy. A surplus balance of payments may indicate strong economic performance, but it does not directly affect the demand for loans.

Fast-Growing Economies Often Have a Greater Demand for Loanable Funds