Advertisements
Advertisements
Question
______ costs of borrowing increase the debt-burden.
Advertisements
Solution
High costs of borrowing increase the debt-burden.
Explanation:
When interest rates or financing fees rise, a larger portion of each payment is used to service the interest rather than pay down the principal balance. This extends the time required to pay off the debt and dramatically raises the overall amount owing, putting further financial hardship on the borrower.
APPEARS IN
RELATED QUESTIONS
Explain with an example, how credit plays a vital and positive role for development.
Compare formal sector loans with informal sector of loans regarding interest only.
Which one of the following is a formal source of credit?
Why is it necessary for the banks and cooperative societies to increase their lending facilities in rural areas? Explain.
How do banks mediate between those who have surplus money and those who need money?
How can the problem of unemployment be eradicated in India? Explain any three ways.
“Credit can play a positive role.” Justify the statement with arguments.
Answer the following question.
Describe the bad effects of informal sources of credit on borrowers.
Explain any three reasons for the banks and cooperative societies to increase their lending facilities in rural areas.
Answer the following question.
Give any two examples of the informal sector of credit.
