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  9. Q66

HPSC HCS 2021 · Question 66 of 177

A country is said to be in debt trap if:

Economy

  1. AIt has to abide by the conditionality imposed by the International Monetary Funds.
  2. BIt is required to borrow money to make interest payments on outstanding loans.Correct
  3. CIt has been refused loans or aide by creditors.
  4. DThe World Bank charges a very high rate of interest on outstanding as well as new loans:

Answer: B. It is required to borrow money to make interest payments on outstanding loans.

Explanation

A debt trap occurs when a country must borrow fresh money merely to service interest on outstanding loans.

Source: HPSC HCS (Ex.Br.) Prelims Paper-I (General Studies) held 12-Sep-2021 (exampyq/doorsteptutor compilation); answers per official HPSC answer key

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