Class 9 Social Part 3B Economic Chapter 2 Basic Economic Problems
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Part III: (b) Economics
Basic Economic Problems
Lesson-Based Questions &Answers
Short Answer Type Questions
1. Write the definitions:
(a) Poverty
(b) Unemployment
(c) Population Density
(d) Sex Ratio
(e) Absolute Poverty
(f) Relative Poverty
(g) Sustainable Development
(h) Green Economy
Ans: (a) Poverty: Poverty is a condition in which a person fails to obtain the basic necessities of life such as food, clothing, shelter, education, and healthcare.
(b) Unemployment: When a person has the ability and willingness to work but does not get suitable employment, such a condition is called unemployment.
(c) Population Density: The number of people living per square kilometer in a particular area is called the population density of that place.
(d) Sex Ratio: The number of females per 1000 males living in a place, state, or country is called the sex ratio of that place, state, or country.
(e) Absolute Poverty: When poor people fall into a vicious cycle of poverty and move towards deeper levels of poverty, it is called absolute poverty.
(f) Relative Poverty: When a comparison of poverty is made between two individuals, and one is considered poorer relative to the other, such a condition is called relative poverty.
(g) Sustainable Development: Development that meets the needs of the present generation without hampering the ability of future generations to meet
their needs is called sustainable development.
(h) Green Economy: An economy whose main objective is to reduce environmental risks and ecological imbalances and achieve sustainable development is called a green economy.
2. What is the poverty line? What is the poverty line in rural and urban areas?
Ans: The line that divides people in a society into two groups—poor and non-poor—is called the poverty line. In rural areas, those who cannot obtain 2400 calories per day per person,
and in urban areas those who cannot obtain 2100 calories per day per person, are considered to be below the poverty line.
3. According to the 2011 Census, what is the population of India and Assam?
Ans: According to the 2011 Census, the population of India is 121 crore, and the population of Assam is 3 crore 12 lakh.
4. What percentage of the world’s land area is in India?
Ans: 2.4% of the world’s land area is in India.
5. Which state in India has the highest sex ratio and what is it?
Ans: The state with the highest sex ratio in India is Kerala. Its sex ratio is 1084.
6. What is the population density of Assam?
Ans: The population density of Assam is 397 persons per square kilometer.
7. What is disguised unemployment?
Ans: Disguised unemployment refers to a situation where a person appears to be employed but actually contributes nothing to production. For example, if four people are engaged in a job that requires only two, the extra two are considered disguised unemployed.
8. What is inflation?
Ans: Inflation refers to a situation where the value of money decreases and the prices of goods increase.
9. What are the causes of inflation?
Ans: The main causes of inflation are: (a) demand-pull factors and (b)cost-push factors.
10. What is suppressed inflation?
Ans: When the government controls prices through direct measures such as public distribution systems and price fixing, keeping the price level below the free market level and reducing the rate of price rise, such inflation is called suppressed inflation.
11. Which commission and when proposed the definition of sustainable development?
Ans: The definition of sustainable development was proposed by the Brundtland Commission in 1987.
12. What do environmentalists suggest as the guiding principle of human thought and action?
Ans: Environmentalists suggest the following as the guiding principle of human thought and action:
“Think globally, act locally.”
Essay Type Question-Answers
1. Discuss the main causes of the population growth problem in India.
Ans: The main causes of population growth in India are discussed below:
(a) High Birth Rate: India has a very high birth rate. Moreover, due to significant advancements in modern medical science, the death rate has declined, leading to population growth.
(b) Illiteracy: Illiteracy is one of the major causes of population growth in India. A large section of the population is deprived of education. Illiterate people are unaware of family planning. Moreover, a traditional belief persists in Indian society that having more children is a matter of pride. Influenced by such beliefs, many couples contribute to population growth.
(c) Poverty: Poverty is another important cause of population growth. Poor people are mainly concerned with earning their daily livelihood and cannot focus on education. Due to ignorance, they tend to have more children, thereby increasing the population.
(d) Unequal Distribution of Resources: India is a vast country with a large population and abundant natural resources. However, these resources are concentrated in the hands of a few people. As a result, despite government efforts, equal distribution of resources has not been achieved. Consequently, the poor remain poorer and the rich become richer.
(e) Lack of Family Planning: Due to illiteracy and poverty, a large section of the population is not aware of or does not adopt birth control measures. As a result, the birth rate increases significantly, leading to population growth and increased poverty.
2. What is poverty? Explain how the poverty line determines poverty.
Ans: Poverty is a condition in which a person fails to obtain the basic necessities of life such as food, clothing, shelter, education, and healthcare. The poverty line indicates a minimum threshold that divides the population of a country into poor and non-poor. In India, poverty is determined based on calorie intake. According to the definition given by the Planning Commission, those who cannot obtain 2400 calories per day in rural areas and 2100calories per day in urban areas are considered to be below the poverty line. In this way, the poverty line helps to determine poverty.
3. What is meant by inflation? Discuss the main methods of controlling inflation.
Ans: Inflation refers to a situation where the value of money decreases and the prices of goods increase. The main causes of inflation are two: (a)demand-pull factors and (b) cost-push factors. The methods of controlling inflation are discussed below:
(a) Monetary Policy: Among the monetary policies adopted by the government, the bank rate policy is significant. Bank rate refers to the rate at which the central bank lends money to commercial banks. During inflation, the bank rate is increased, as a result of which commercial banks increase their lending rates. Consequently, borrowers are discouraged from taking loans, credit in the market decreases, and inflation is controlled.
(b) Fiscal Policy: Fiscal policy refers to policies related to income and expenditure. According to this policy, inflation is controlled by reducing or regulating government expenditure, thereby decreasing overall demand in the economy. Additionally, by imposing various taxes, excess money from the hands of the public is transferred to the government treasury, which helps in controlling inflation.
(c) Production Increase Policy: The government increases production by properly utilizing idle resources. As a result, the supply of goods increases in proportion to rising demand, stabilizing the price level and controlling inflation.
4. What is the problem of unemployment? What are its types?
Ans: When a person has the ability and willingness to work but does not get suitable employment, such a condition is called unemployment. Unemployment is generally of two types:
(a) rural unemployment and (b) urban unemployment.
(a) Rural Unemployment: Unemployment in rural areas is called rural unemployment. It is further divided into two types: seasonal unemployment and disguised unemployment. People who remain unemployed during a certain period of the year and employed during the rest are called seasonally unemployed. For example, in many states of India, farmers remain engaged in agricultural work for about six months and remain unemployed for the remaining six months. On the other hand, disguised unemployment refers to a situation where a person appears to be employed but actually contributes nothing to production. For example, if four people are engaged in a job that requires only two, then the extra two are considered disguised unemployed.
(b) Urban Unemployment: Unemployment in urban areas is called urban unemployment. It is of two types: industrial unemployment and educated unemployment. People who have the ability and willingness to work in industries but do not get employment opportunities are called industrially unemployed. On the other hand, those who possess proper educational qualifications but fail to get employment are called educated unemployed.
5. Write short notes:
(a) Seasonal Unemployment
(b) Demand-pull and Cost-push Inflation
(c) Sustainable Development
(d) Green Economy
(e) Open and Suppressed Inflation
Ans: (a) Seasonal Unemployment: People who remain unemployed during a certain period of the year and employed during the rest are called seasonal unemployment. For example, in many states of India, farmers remain engaged in agricultural work for about six months and remain unemployed for the remaining period.
(b) Demand-pull and Cost-push Inflation: The main causes of inflation are demand-pull inflation and cost-push inflation. Demand-pull inflation is a situation where demand for goods and services increases but supply does not increase accordingly. On the other hand, cost-push inflation is a situation where the cost of production of goods and services increases, leading to a rise in prices.
(c) Sustainable Development: Development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs is called sustainable development.
(d) Green Economy: An economy whose main objective is to reduce environmental risks and ecological problems and achieve sustainable development is called a green economy.
(e) Open and Suppressed Inflation: Open inflation refers to a situation where the value of money decreases and prices rise freely without government control. On the other hand, when the government controls prices through direct measures such as public distribution systems and price determination, keeping the price level below the free market level, it is called suppressed inflation.
Additional Questions and Answers
1. What is one of the main features of the Indian economy?
Ans: One of the main features of the Indian economy is that it is agriculture-based.
2. What percentage of the world’s total population lives in India?
Ans: 17.5 percent.
3. Which state in India has the highest population density?
Ans: West Bengal, with 1029 persons per square kilometer.
4. Which state in India has the lowest population density?
Ans: Arunachal Pradesh, with only 17 persons per square kilometer.
5. What is inflation according to Karl Brunner?
Ans: According to Karl Brunner, “Inflation is a situation where more money is required to purchase fewer goods.”
6. In which Five-Year Plan of India was poverty eradication taken as the main objective?
Ans: In the Fifth Five-Year Plan.
7. Which group of people is most affected during inflation?
Ans: Fixed income earners.
8. Mention two causes of environmental degradation.
Ans: (a) Loss of biodiversity (b) Global warming.
9. According to the Tendulkar Committee, what percentage of people in Assam are below the poverty line?
Ans: 34.4 percent.
10. What is the name of the organization that conducts surveys on unemployment in India?
Ans: National Sample Survey Organisation.
11. Mention some problems arising from poverty.
Ans: (a) Food scarcity (b) Environmental degradation (c) Lack of housing(d) Migration (e) Social inequality.
12. “Think globally and act locally” — who suggested this as the guiding principle of human thought and action?
Ans: Environmentalists.
13. Into how many categories can the causes of poverty be divided?
Ans: The causes of poverty can be divided into three categories: (a) Historical (b) Economic (c) Social.
14. Can social inequality be a cause of poverty?
Ans: Yes, it can.
15. Is it possible to eradicate poverty in the present world?
Ans: Yes, it is possible.
Multiple Choice Questions (MCQs)
1. What is economics primarily concerned with?
(a) Unlimited resources
(b) Human behavior regarding scarce resources
(c) Political systems
(d) Cultural values
Ans: (b)
2. Which of the following is a basic problem of economics?
(a) What to produce
(b) How to produce
(c) For whom to produce
(d) All of the above
Ans: (d)
3. What is scarcity in economics?
(a) Abundance of resources
(b) Limited resources with unlimited wants
(c) Equal distribution of wealth
(d) Excess production
Ans: (b)
4. Opportunity cost refers to:
(a) Total cost of production
(b) Cost of labor
(c) Value of the next best alternative foregone
(d) Cost of capital
Ans: (c)
5. Which of the following is a factor of production?
(a) Land
(b) Labor
(c) Capital
(d) All of the above
Ans: (d)
6. Utility means:
(a) Usefulness of a commodity
(b) Price of a commodity
(c) Demand of a commodity
(d) Supply of a commodity
Ans: (a)
7. What is demand?
(a) Desire for a good
(b) Desire backed by willingness and ability to pay
(c) Supply of goods
(d) Production of goods
Ans: (b)
8. Law of demand states:
(a) Price and demand move in same direction
(b) Price and demand move in opposite direction
(c) Demand is constant
(d) Supply increases with price
Ans: (b)
9. Supply refers to:
(a) Quantity demanded
(b) Quantity produced
(c) Quantity offered for sale
(d) Quantity consumed
Ans: (c)
10. What is equilibrium price?
(a) Highest price
(b) Lowest price
(c) Price where demand equals supply
(d) Government fixed price
Ans: (c)
11. What is inflation?
(a) Decrease in prices
(b) Increase in value of money
(c) Rise in general price level
(d) Stability of prices
Ans: (c)
12. Which policy is used to control inflation?
(a) Monetary policy
(b) Fiscal policy
(c) Both (a) and (b)
(d) None
Ans: (c)
13. What is unemployment?
(a) Lack of education
(b) Lack of resources
(c) Willingness to work but no job
(d) Working without salary
Ans: (c)
14. Seasonal unemployment is common in:
(a) Industry
(b) Agriculture
(c) Banking
(d) Education
Ans: (b)
15. Disguised unemployment means:
(a) No job at all
(b) Hidden employment with zero productivity
(c) Temporary job
(d) High salary job
Ans: (b)
16. Sustainable development means:
(a) Development for present only
(b) Development ignoring environment
(c) Development without harming future generations
(d) Industrial growth only
Ans: (c)
17. Green economy focuses on:
(a) Industrial growth
(b) Environmental protection
(c) Military strength
(d) Trade expansion
Ans: (b)
18. Demand-pull inflation occurs when:
(a) Supply increases
(b) Demand exceeds supply
(c) Cost decreases
(d) Production falls
Ans: (b)
19. Cost-push inflation is caused by:
(a) Increase in production cost
(b) Decrease in wages
(c) Increase in supply
(d) Decrease in demand
Ans: (a)
20. Fiscal policy deals with:
(a) Money supply
(b) Interest rates
(c) Government revenue and expenditure
(d) Banking system
Ans: (c)
21. Which of the following best explains the central economic problem?
(a) Poverty
(b) Unemployment
(c) Scarcity of resources relative to wants
(d) Inflation
Ans: (c)
22. If the price of a commodity rises and demand falls, it illustrates:
(a) Law of supply
(b) Law of demand
(c) Law of utility
(d) Law of production
Ans: (b)
23. Which factor of production earns interest?
(a) Land
(b) Labor
(c) Capital
(d) Entrepreneur
Ans: (c)
24. When additional workers do not increase output, it is called:
(a) Seasonal unemployment
(b) Structural unemployment
(c) Disguised unemployment
(d) Frictional unemployment
Ans: (c)
25. Which policy directly reduces excess money supply?
(a) Increasing taxes
(b) Increasing bank rate
(c) Increasing subsidies
(d) Increasing wages
Ans: (b)
26. Opportunity cost arises due to:
(a) Abundance
(b) Scarcity
(c) Inflation
(d) Unemployment
Ans: (b)
27. Which situation represents suppressed inflation?
(a) Free market pricing
(b) Rising prices without control
(c) Government-controlled prices
(d) Decreasing production
Ans: (c)
28. Which is not a characteristic of demand?
(a) Desire
(b) Ability to pay
(c) Willingness to pay
(d) Government control
Ans: (d)
29. Increase in production leading to price stability is related to:
(a) Monetary policy
(b) Fiscal policy
(c) Production policy
(d) Trade policy
Ans: (c)
30. Which of the following best defines utility in economics?
(a) Satisfaction derived from consumption
(b) Cost of production
(c) Market demand
(d) Supply of goods
Ans: (a)
31. The central problem of an economy arises due to:
(a) Unlimited resources
(b) Limited wants
(c) Scarcity of resources with unlimited wants
(d) Equal income distribution
Ans: (c)
32. Which of the following best defines poverty line?
(a) Maximum income level
(b) Minimum consumption level
(c) Average income
(d) Total wealth
Ans: (b)
33. Which unemployment type shows zero marginal productivity?
(a) Seasonal
(b) Disguised
(c) Educated
(d) Industrial
Ans: (b)
34. Increase in bank rate helps to:
(a) Increase inflation
(b) Reduce inflation
(c) Increase demand
(d) Increase supply
Ans: (b)
35. Fiscal policy controls inflation by:
(a) Increasing money supply
(b) Reducing government expenditure
(c) Reducing production
(d) Increasing imports
Ans: (b)
36. Relative poverty depends on:
(a) Absolute income
(b) Comparison among people
(c) Government policy
(d) Price level
Ans: (b)
37. Green economy aims at:
(a) Economic growth only
(b) Environmental sustainability
(c) Industrialization only
(d) Population growth
Ans: (b)
38. Sustainable development concept was given by:
(a) Planning Commission
(b) Brundtland Commission
(c) World Bank
(d) IMF
Ans: (b)
39. Which of the following is not a cause of inflation?
(a) Demand increase
(b) Cost increase
(c) Excess supply
(d) Excess money supply
Ans: (c)
40. Poverty in India is measured mainly on the basis of:
(a) Income only
(b) Calorie intake
(c) Education
(d) Employment
Ans: (b)
