Choose if the given statement is true/false.

Credit can play a negative role in certain situations.

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True

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answer is A.

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Detailed Solution

The given statement is true.
Credit can also play a negative role in certain situations. The situation when a creditor is unable to repay a previous loan and has to take another loan to repay the previous one will create a debt trap for the creditor. In high-risk situations, when the loan is taken on the uncertainty of the future, such as a farmer taking a loan for sowing his crops and failing in harvest, will lead to a debt trap for that farmer. Rural borrowers depend on informal sources for taking loans, which trick them and charge high rates of interest that they are unable to pay and will suffer for the rest of their lives.

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