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Single Answer MCQ
Q-00045476

The term 'credit trap' refers to which situation?

1

Having excess savings

2

Working to repay a debt while taking new loans

3

A surplus in earnings

4

Zero interest rates

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Sandeep Chaturvedi

Sandeep Chaturvedi

CBSE Social Science & Humanities Reviewer

Social science and humanities educator with 14+ years of experience reviewing CBSE SST, economics, commerce, arts, and vocational content.

M.A. HistoryM.A. Political ScienceB.Ed.

Answer and Solution

Answer

B. Working to repay a debt while taking new loans

Solution:

A credit trap occurs when a borrower continuously takes new loans to repay existing debts, leading to a cycle of increasing debt that is hard to escape.

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