Question

explain two situations where credit plays ​

Answer 1

Explanation:

Answer ❤️

• Saleem obtains loans to meet the needs of production. The credit helps him to meet the need of ongoing expenses of production, complete production in time and thereby increase his earnings. Sometimes, credit, instead of helping people, pushes them into a debt trap.

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Answer 2

Answer:

Credit arrangements can be divided into two categories. These are as follows:

i) Formal Sector- It includes banks and cooperatives that extend loans to households for entrepreneurship and other personal needs. The rates of interest charged by them are low.

ii) Informal Sector- It includes moneylenders, traders, employers, relatives and friends. The moneylenders generally charge at a higher rate of interest.