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Class 12 Tuition > Learn Economics > "Loans from banks always help to raise people's earning...
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"Loans from banks always help to raise people's earning capacity". Justify the statement.

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Yes it s raise people's earning capacity because people start the business using loan easily.
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Loans not necessarily help to raise people's earning capacity. The positive impact of loan on earning will depend how the loan is utilised. For example, if a loan taken from bank is invested in a process which will fetch regular return in short or long term it will increase the earning. However, if the...
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Loans not necessarily help to raise people's earning capacity. The positive impact of loan on earning will depend how the loan is utilised. For example, if a loan taken from bank is invested in a process which will fetch regular return in short or long term it will increase the earning. However, if the same loan is used to purchase a product which is only for consumption without any return on the same then it has no impact on the earning. If we purchase dress or a car or any household item with a bank loan it does not increase my earning. If I purchase land or property or invest in financial products like mutual fund there is a possibility of increase in my earnings. read less
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