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Understanding the Basics of Credit
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Understanding the Basics of Credit

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@TenaciousBlessing

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Questions and Answers

Credit is based on

  • The debtor's ability to pay in the future
  • The creditor's confidence in the debtor (correct)
  • The creditor's financial status
  • The debtor's willingness to borrow

    • Who has the power to accept or reject credit?

  • The lender
  • The debtor
  • The borrower
  • The creditor (correct)

    • When credit is accepted, what is created?

  • Obligation (correct)
  • Payment
  • Debt
  • Confidence

    • What does the obverse side of the coin represent in the credit system?

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

    Why is it important to understand the credit system?

    <p>To recognize credit</p> Signup and view all the answers

    What is the nature of credit and how does it depend on the debtor's ability to pay?

    <p>Credit is based on the confidence in the debtor's ability to pay in the future.</p> Signup and view all the answers

    Who are the parties involved in a credit transaction and what happens to credit and debt?

    <p>The parties involved are the creditor and the debtor. Credit and debt are simultaneously created and destroyed.</p> Signup and view all the answers

    How can the relationship between credit and debt be portrayed?

    <p>The relationship can be portrayed as the two sides of a coin, where the obverse represents credit and the reverse represents debt.</p> Signup and view all the answers

    What is the significance of understanding the credit system?

    <p>Understanding the credit system is important to comprehend the nature of credit and its implications.</p> Signup and view all the answers

    Can credit be given away? Explain.

    <p>No, credit cannot be given away as it needs to be appraised and recognized by the lender before acceptance.</p> Signup and view all the answers

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