Microlenders offer small loans to borrowers who are unable to get loan

Question 1. The author's primary objective in the passage is to

A. introduce readers to the concept and history of microcredit.
CORRECT -- The passage opens with introducing the reader to what microlenders do, and how microcredit helps lead people out of poverty. It then describes the origin, growth, and impact of microcredit (in line with answer choice A).

B. chronicle Professor Yunus's path to the Nobel Peace Prize.
INCORRECT -- Although Professor Yunus is introduced in the second half of the passage, he is mentioned as a part of the origin of microcredit and is not the main focus of the passage itself.

C. explain that women are better credit risks than men.
INCORRECT -- Near the end of the passage, the author mentions in passing that "Over 80 percent of those receiving microloans are women, who have proved to be lower credit risks than men". This was mentioned to provide more information on the history and context of microcredit, which is the main objective of the passage.

D. demonstrate that microcredit is an ineffective way to bring families up from poverty.
INCORRECT -- On the contrary, the author states at the beginning of the passage that "Microlending programs allow very poor people to develop or expand self-employment projects that generate additional income and lead them out of poverty", and includes an example of a successful Sri Lankan candy producer who started with a $100 microloan.

E. predict the future of microcredit.
INCORRECT -- Out of scope: the author is focused on discussing the history and growth of microcredit, not on speculating what the future will be. At the end the author quotes the Nobel Committee that microcredit is a means for lasting peace, but this is merely a quote and the author does offer his own opinion.


Question 2. The author of this passage would most likely agree with which of the following statements?

A. Microlenders are foolish not to insist on credit scores and collateral from their potential clients.
INCORRECT -- The author positions microlending as an alternative to traditional lenders, which "allow very poor people to develop or expand self-employment projects that generate additional income and lead them out of poverty". This passage mostly focuses on the success and positive socio-economic impact of microcredit, with no mention of criticisms on microlenders/ the microcredit model.

B. Microcredit is a virtually risk-free investment.
INCORRECT -- The author never explicitly states that this model is low-risk, although based on the profile of the borrowers ("people in poverty who have no credit history, collateral, or steady employment") low-risk seems unlikely without more information.

C. Microloans have only a small impact on relatively few people.
INCORRECT -- On the contrary, the author provides statistics that strongly imply the opposite (large impact on many people): "In 1983, he founded the Grameen Bank, which now has over 2,500 branches and 20,000 employees... In 2009, more than 128 million families received microloans".

D. Professor Yunus has demonstrated that business interests and social consciousness are not mutually exclusive.
CORRECT -- Evidently, Yunus's microcredit model has had a huge positive social impact ("Nobel Committee acknowledged that "lasting peace cannot be achieved unless large population groups find ways to break out of poverty. Microcredit is one such means"). Yunus's Grameen bank must also be successful as a business, if it "now has over 2,500 branches and 20,000 employees". In addition, the microcredit model gives people in poverty the opportunity "to develop or expand self-employment projects that generate additional income and lead them out of poverty". Their business success can also lead to increased employment within their communities (i.e. the Sri Lankan candy maker), further demonstrating how business interests and social impact can be aligned.

E. The microcredit model works only in third-world countries.
INCORRECT -- The author never states that the microcredit model only works in 3rd world countries, only that "Microlenders offer small loans to borrowers who are unable to get loans from traditional lenders... people in poverty who have no credit history, collateral, or steady employment." (a demographic that exists in every country in the world)


Question 3. The author first quotes the Nobel Committee in order to

A. state that microlending leads to world peace.
INCORRECT -- This answer choice seems correct, except that it was technically the second quote in the passage associated with the Nobel Committee/ right at the end of the passage ("the Nobel Committee acknowledged that "lasting peace cannot be achieved unless large population groups find ways to break out of poverty. Microcredit is one such means.""). Since this questions specifies "first quotes", I prefer answer choice B.

B. confirm that microlending has successfully led people out of poverty.
CORRECT -- The first quote in the passage associated with the Nobel Committee is "Professor Yunus was awarded the Nobel Peace Prize for "efforts to create economic and social development from below,"" right alongside a list of successes and positive social impact that microcredit has realized. (winning the Nobel Peace prize would be the highest recognition for that achievement)

C. illustrate the prestige of winning the award.
INCORRECT -- Although the Nobel Peace prize is definitely prestigious, the purpose of the information and quote is to emphasize the incredible impact that microcredit has had on socio-economic development.

D. argue that development from below is more effective than traditional large-scale economic development programs.
INCORRECT -- Out of scope: Although the author has made a strong case that development from below can be extremely effective, the author did not compare against traditional large-scale development at all.

E. defend against critics who feel that microlending is ineffective.
INCORRECT -- Out of scope: In fact, there is no mention of any criticism against the microcredit model at all (based on this passage, microlending seems like an ideal model)