Question

what is credit? how can credit be both an asset as well as debt trap

Answer 1

credit is an aggrement between lender and borrower where lender lends money to the borrower and the borrower is having both an asset as well as dept trap if it if the borrower uses it as an asset means I used it for it on Profit then you can be an asset and if he is not able to repay the credit then he will fall in debt trap.

Answer 2

Answer:

Credit transfers to an understanding in which the bank satisfies the borrower with funds, assets or services in revenue for the encouragement of future payment.

Example of credit as an asset: During the celebration season, a shoe company has earned an - order of producing shoes in bulk, inside a month. To achieve reproduction, he borrowed some extra artists and has to buy the raw materials.

Example of credit as debt trap: A producer pulls up the loan from a moneylender to satisfy the obligations of farming. But accidentally the harvest is caught by the bugs and crop fails. So, he is incapable to reciprocate the loan and money grows more open with debts.