“Loans from banks always help to raise people’s earning capacity”. Justify this statement using suitable examples.
Business loans help to establish people’s businesses, enabling them to earn more.
The examples are
(i) They can purchase machinery and equipment with a loan to start productive activities in manufacturing.
(ii) With a loan, they can purchase raw materials for processing into finished products, thus increasing their earning power.
(iii) For seasonal items, by getting a loan against storage of finished goods produced during the off season, they can earn more by selling more during the season.
Thus, it can be concluded that loans from banks always help to raise people’s earning capacity.