explain positive and negative role of credit taking reference with salim and swapna's case study.
5 mark question.
best one as brainliest!
Answers
Credit refers to a loan, an agreement in which the lender supplies the borrower with money, goods or services in return for the promise of future payment. It refers to an activity of borrowing and lending money between two parties.
Credit can play a both positive and negative role.
a. For example, a manufacturer taking credit during festive season in anticipation of increased demand for his product during the festival, to expand his production, to meet his production costs and later that situation has worked in his favour, as it enabled him to increase his output and sales too. In such a situation ,credit plays a positive role. As in case of Salim the shoe manufacturer, the example mentioned in the textbook.
b. However, in another situation for instance, a small farmer who has taken credit for cultivation might face a problem. As crop production involves high costs on inputs life HYV of seeds, fertilizers, pesticides etc. Farmers generally take loans at the beginning of the season and repay after harvest. But the failure of the crop makes loan repayment impossible, which at times compel them to sell part of their land which worsens their situation. Here, credit has a negative impact.
Answer:
positive role:(salim-festival season)
in salim,case,
*he got an order of making a shoe of 3000 pairs from a trader
*he borrowed some advanced from thr trader& promise to supply by the end of month and ask to supply leather from the supplier and promised to pay the money when he get paid
* even he hired some PPL to work under him,to complete the by the and of month to accomplish the trader
promised
*as promised to trader that he supplied the order
*made good profit and supplied the money to the leather and the workers
in this role credit played a positive role