Which of the following best describes how the formal sources are different from the informal sources of credit?

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Formal sources consist of banks while the informal sector consists of moneylenders, and traders.

Formal sources provide loans at low interest rates.

Formal sources need proper documentation for any debt.

All of the above

answer is D.

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Detailed Solution

The direct exchange of goods and services with other goods is known as the barter system, while in the present scenario, money is used as a medium of exchange.
In a barter system, both parties have to agree to exchange each other’s goods. Money is used as a medium of exchange in the system that is followed now. Transactions can be made with money, as a person holding money can exchange it for any commodity or service. It can also be exchanged while consuming any service, such as a doctor, teacher, etc.

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