Q1. [1] medium initial-understanding
A farm labourer borrows repeatedly from her employer-landlord to cover daily expenses and repays by working for him. Which of the following best explains why this arrangement traps her in a cycle of debt?
(A) She prefers to borrow from the landlord rather than from a cooperative society.
(B) The high interest rate means each new loan is taken before the previous one is fully repaid, so the debt keeps growing.
(C) She spends her earnings on things she does not need instead of repaying the loan.
(D) The bank refuses to lend money to farm labourers.
- A The landlord refuses to let her work on other farms, leaving her with no income.
- B The high interest rate means each new loan is taken before the previous one is fully repaid, so the debt keeps growing.
- C She spends her earnings on things she does not need instead of repaying the loan.
- D The cooperative society has refused to admit her as a member.
Generated by claude-sonnet-4-6 · 2026-06-26 13:21 · grounding rag
Model Answer
(B) The high interest rate means each new loan is taken before the previous one is fully repaid, so the debt keeps growing.
Explanation
The passage states Rama's employer charges 5% per month interest and that "most of the time, Rama has to take a fresh loan before the previous loan has been repaid." High informal interest rates make full repayment nearly impossible, trapping borrowers in a debt cycle. This is the textbook definition of a debt-trap. Options A and D are not supported by the passage about Rama.