Question

Why is credit an important part of the economy?

A. It allows people and businesses to pay off expensive purchases
over time.

B. It helps workers find higher-paying jobs that take advantage of
their skills.

C. It encourages businesses to sell products both domestically and
internationally

D. It prevents banks from charging companies interest on long-term
loans.

Answer 1

A. It allows people and businesses to pay off expensive purchases

over time.

Step-by-step explanation:

A credit facility is an arrangement where a buyer obtains goods or services and pays for them over a long time. Credit contrasts cash payment, where the buyer pays make full payment for a product when acquiring it.

Credit allows a business to acquire expensive items and assets. Should a business be in need of something that it cannot afford to pay on a cash basis, it can negotiate favorable credit terms with the seller. Payments for such an item are spread over an agreed period. The buyer pays through small and affordable installments until they clear the debt.