Question

Read the following situation regarding credit and identify the positive impact of credit.

Salim obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses and complete production on time.

Options

• The burden of credit will increase on Salim.

• Salim’s income will increase.

• The production will decrease.

• Salim may get stuck in debt trap.

Answer 1

Salim’s income will increase.

Explanation:

Many transactions in our day-to-day activities involve credit in some form or another. Credit (loan) refers to an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment.