Social Science (087) — AI-generated practice question

Credit helping a borrower: Salim, a shoe manufacturer, took a loan to buy raw materials and complete an order. He delivered the goods, earned profit, and repaid the loan. Here, the risk was low and the income from the activity was enough to repay — so credit increased his earnings.

Credit harming a borrower: Swapna, a small farmer, borrowed from a moneylender for crop cultivation. A pest attack destroyed her harvest, making repayment impossible. Debt accumulated, and she had to sell part of her land — a classic debt trap.

What determines the outcome: Credit helps when risks are manageable and returns are sufficient to repay. It harms when risks are high (crop failure, no collateral, high interest) and there is no support in case of loss.

Source: Chapter 3 — Two Different Credit Situations

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• The examiner expects two named examples (Salim and Swapna are textbook examples — use them).
• The key determinant phrase from the textbook is: "Whether credit would be useful or not depends on the risks in the situation and whether there is some support in case of loss." Include this idea explicitly.
• Avoid writing only about one side; balance is essential for full marks.
• 3 marks = roughly one example each + one line on the determining factor.