Social Science (087) — AI-generated practice question

Both Salim and Swapna borrowed for productive purposes, but the risk involved in each situation was different.

Salim had a confirmed order, so his income was certain. Credit helped him meet working capital needs, complete production on time, and earn a profit. He repaid the loan comfortably.

Swapna's crop failed due to a pest attack, making repayment impossible. Debt accumulated over two years, forcing her to sell part of her land to repay it — a debt trap.

Thus, whether credit helps or harms depends on the risk in the situation and whether there is support in case of loss.

Source: Chapter 3 — Money and Credit, Two Different Credit Situations

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• The key concept examiners expect is debt trap and the role of risk.
• Mention both cases briefly and contrast them — don't explain only one.
• The textbook's own conclusion is the best closing line: "Whether credit would be useful or not depends on the risks in the situation and whether there is some support in case of loss." Use it directly.
• Avoid padding — 3 marks = ~3 distinct points: Salim's outcome, Swapna's outcome, and the reason for the difference.