High Interest Rates on Microloans While microloans are inten…
High Interest Rates on Microloans While microloans are intended to help small entrepreneurs in countries like India and Guatemala to start businesses, excessively high-interest rates can instead keep them in debt, inadvertently contributing to the poverty trap. Question: Why might high interest rates on microloans contribute to the poverty trap for small entrepreneurs? A) They decrease the amount of debt owed over time. B) They can consume a significant portion of the business’s profit, making it hard to grow or even sustain the business. C) They reduce the desire to take risks. D) They ensure quicker repayment of loans.