Why do interest rates on loans tend to be higher in a strong economy than in a weak one?

In a strong economy, businesses and consumers are more likely to borrow, so demand for credit rises. When demand increases, lenders can charge more, just as prices tend to rise when demand for a good increases. Therefore, “Credit markets increase in a strong economy, and with increased demand come increased prices” is the best answer; the other choices do not explain the general relationship between economic strength and loan rates.

AI-written and checked against the verified answer.