explain with the example negative role of credit.......
calss 10th money and credit lesson plzzz answer this question plzzz give answer in points
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explain with the example negative role of credit.......
calss 10th money and credit lesson plzzz answer this question plzzz give answer in points
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Answer:
Banks use a major portion of deposits to extend loans. They charge a higher rate
of interest on loans than what they offer on deposits. The difference between what is charged from borrowers and what is paid to the depositors is the main source of income for the banks.
Question 2.
Why can one not refuse a payment made in rupees in India?
Answer:
One cannot refuse a payment made in rupees in India because it is authorised
by the government of India. It is accepted as a medium of exchange all over the country.
Question 3.
Compare formal sector loans with informal sector loans regarding interest only.
Verified answer
Answer:
Credit also play an negative role as it can lead to the depth trap for those whose earning is very less .
ex. A farmer who is having a land in which he is growing crops by taking a loan but due to the less rain the crop was not so good that the farmer can pay loan .
So for another crop cultivation he had to take a one more loan but this time also he was unable to pay loan due to the attack of locusts on crop .
Now to pay the loan the farmer had to sell apart of his own land .
This is how credit can play a negative role.