AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.
A debt trap is a situation where a borrower is unable to repay a loan, borrows again to cover the old debt, and gets trapped in a cycle of increasing debt from which recovery is very painful.
Source: Chapter 3, Two Different Credit Situations
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The term is directly defined in the passage using Swapna's example. Examiners expect you to mention: (1) inability to repay, (2) further borrowing/worsening situation, and (3) the idea that the borrower is worse off than before. One clear sentence covering these points is sufficient for 1 mark. Avoid writing a long paragraph.