Assertion (A): Assertion: Rohan took credit in the form of advance payment from a buyer and he delivered the goods to the buyer on time and also earned a profit. The credit made Rohan better off in this situation.

Reason (R): Credit can never put a person into a debt trap.

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Both (A) and (R) are true and (R) is the correct explanation of (A).

Both (A) and (R) are true but (R) is not the correct explanation of (A).

(A) is correct but (R) is wrong

(A) is wrong but (R) is correct

answer is C.

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Detailed Solution

(A) is correct but (R) is wrong
Rohan had taken advance payment for his order which is the productive purpose of the loan. He can deliver his order and earn profit as well. In this case of credit, it has been beneficial for Rohit. A person falls into a debt trap if he cannot pay his loan and takes another loan to pay the existing loan; if this cycle continues, he falls into a debt trap.
Credit can lead to a debt trap if it is taken for unproductive purposes, which will not give the person a return to repay the loans.

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