Choose the given statement is true/false:

A person who has taken a loan from formal sources is in a better position to repay it as the terms of repayment are easier as compared to those from informal sources.

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True

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answer is A.

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Detailed Solution

The above statement is true.
The terms of repayment are easy in the case of formal loans as compared to informal ones. Let's assume a case of two farmers; one has taken a loan from the bank at a rate of interest of 10% per annum, while the other has taken a loan of 5% per month. The first one is in a better position to repay the loan as the interest is very low, and he can also take a new loan after a few years. The second farmer might even have to sell his produce at a low price to the moneylender to repay his loan.

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