Read the following situation regarding credit and identify the positive impact of credit.
Salim obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses and complete production on time.
Salim obtains credit to meet the working capital needs of production. The credit helps him to meet the ongoing expenses and complete production on time.
- The burden of credit will increase on Salim.
- Salim’s income will increase.
- The production will decrease.
- Salim may get stuck in a debt trap.
The Correct Option is B
Solution and Explanation
Credit, when used efficiently for productive purposes like meeting working capital needs, enables timely production and can lead to an increase in income. Proper utilization prevents debt traps and ensures economic growth.
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