Question

What is the relationship between credit and debt?

1) assuming debt means more credit will be extended
2) being extended credit means debt has been assumed
3) debt must be assumed before credit can be extended
4) credit must be extended before debt can be assumed

Answer 1

The relationship between credit and debt is that credit often leads to debt. Credit allows you to obtain goods and services before payment, but it also creates a debt that needs to be repaid.

Step-by-step explanation:

The relationship between credit and debt is that credit often leads to debt. When someone is extended credit, it means that they are being trusted to pay for goods or services at a later date. However, this credit also puts the person into debt because they have an obligation to repay the amount they borrowed.

For example, if someone uses a credit card to make a purchase, they are using credit to buy the item, but they are also creating a debt by owing the credit card company the amount of the purchase.

So, in summary, credit is obtaining goods and services before payment based on trust that payment will be made in the future. However, this also means that it creates a debt that needs to be repaid.