Overview of Credit: Importance and Function

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What is the primary consideration in granting credit according to the origin of the word creditum?

Confidence

Futurity

Risk

Trust (correct)

What distinguishes a credit transaction from a cash transaction?

Risk involved

Element of time or futurity (correct)

Confidence in the creditor

Use of goods

What is the vital link between production and distribution, according to the text?

Promotion of full employment

Consumer credit (correct)

Governmental endeavors

Private businesses

What aspect of credit introduces the element of risk for the creditor?

Uncertainty of payment Signup and view all the answers

From the creditor's viewpoint, what does credit represent?

Willingness to accept trust Signup and view all the answers

What is the primary basis for a personal contract involving credit transactions?

Ability to pay Signup and view all the answers

How does credit give fluidity to wealth?

By turning fixed assets into current assets Signup and view all the answers

In a credit transaction, what does the creditor do to demonstrate faith in the debtor?

Transfers title of goods or services based on trust Signup and view all the answers

What is a characteristic of credit transactions related to deferred payment for goods and services?

Payment for goods or services at a later date Signup and view all the answers

How does credit serve as an agent of production?

By channeling idle funds to productive activity Signup and view all the answers

Overview of Credit: Importance and Function

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Questions and Answers

What is the primary consideration in granting credit according to the origin of the word creditum?

What distinguishes a credit transaction from a cash transaction?

What is the vital link between production and distribution, according to the text?

What aspect of credit introduces the element of risk for the creditor?

From the creditor's viewpoint, what does credit represent?

What is the primary basis for a personal contract involving credit transactions?

How does credit give fluidity to wealth?

In a credit transaction, what does the creditor do to demonstrate faith in the debtor?

What is a characteristic of credit transactions related to deferred payment for goods and services?

How does credit serve as an agent of production?

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