Credit System Foundations Quiz
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Questions and Answers

What is the first criterion mentioned in the text for granting credit?

  • Stable money standard
  • Availability of credit sources
  • Ability to provide collateral
  • Evaluation of credit rating (correct)

    • Why must creditors have absolute confidence in the debtors' character and ability according to the text?

  • To increase the debtors' burden
  • To discourage debtors from seeking credit
  • To ensure prompt payment of debts (correct)
  • To avoid granting credit

    • What is the consequence of money not being stable, as per the text?

  • Decrease in creditors' willingness to lend (correct)
  • Increase in interest rates
  • Enhancement of purchasing power
  • Enforcement of loan repayment by the government

    • How does credit function as a power according to the text?

    <p>Expands purchasing ability</p> Signup and view all the answers

    What role does the government play in enforcing loan repayment based on the text?

    <p>Helping creditors recover loans from debtors</p> Signup and view all the answers

    Why are proper facilities for credit operations necessary according to the text?

    <p>To evaluate credit ratings accurately</p> Signup and view all the answers

    What is a key characteristic of consumer credit?

    <p>Extended to consumers for personal consumption</p> Signup and view all the answers

    What type of credit is typically used for the purchase of fixed assets or for carrying out business operations?

    <p>Investment Credit</p> Signup and view all the answers

    What is a motivation behind consumer credit according to the text?

    <p>Desire for convenience</p> Signup and view all the answers

    Which credit type involves only the length of time needed to process and resell goods?

    <p>Mercantile Credit</p> Signup and view all the answers

    What is the main function of commercial bank credit according to the text?

    <p>To assist businessmen in business operations</p> Signup and view all the answers

    What is a common characteristic of mercantile credit based on the text?

    <p>Dependent on existing facilities for delivery</p> Signup and view all the answers

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