Unemployment, Poverty and Inequalities Questions and Answers AP Inter 2nd Year Economics Chapter 6

Reviewing AP Inter 2nd Year Economics Study Material Chapter 6 Unemployment, Poverty and Inequalities Questions and Answers can help students prepare confidently for exams.

AP Inter 2nd Year Economics 6th Lesson Unemployment, Poverty and Inequalities Questions and Answers

Very Short Answer Questions

Question 1.
Differentiate between underemployment and disguised unemployment?
Answer:

Question 2.
What is the calorie-norm with reference to poverty line recommended by Alagh committee?
Answer:
Calorie Norm (Alagh Committee – 1979): The poverty line based on daily calorie intake.

1. Rural areas: 2400 kcal per person per day
2. Urban areas: 2100 kcal per person per day

Question 3.
Distinguish between income poor and MPI poor?
Answer:

Question 4.
Explain the concept and purpose of international poverty line.
Answer:

• The international poverty line is a global standard used to measure poverty across countries, expressed in Purchasing Power Parity (PPP) dollars.
• Purpose: It helps to compare poverty levels internationally and assess progress in reducing global poverty.

Question 5.
Modified mixed recall period.
Answer:
Modified Mixed Recall Period (MMRP):

1. MMRP is a method used to estimate consumption expenditure by using different recall periods for different items.
2. Short recall (7 days) is used for frequently purchased items, while long recall (365 days) is used for infrequently purchased items to get more accurate data.

Question 6.
How does the Orange Economy create employment opportunities?
Answer:
Orange Economy – Employment Creation:

1. The Orange Economy creates employment by promoting creative and cultural industries, turning ideas and talent into economic activities.
2. Being labour-intensive, it provides large-scale job opportunities, particularly for youth and women.

Short Answer Questions

Question 1.
Explain any four types of unemployment.
Answer:
Types of Unemployment:
1) Involuntary Unemployment (Open Unemployment): This occurs when individuals are willing and able to work at current wage rates but cannot find jobs due to lack of employment opportunities. Ex: A group of diploma holders remaining unemployed after applying jobs for various companies because there are no vacant positions available in local companies.

2) Structural Unemployment: This is caused by long-term changes in the economy, leading to a mismatch between workers’ skills and job requirements.
Ex: Web developers losing jobs due to Artificial Intelligence (Al) tools.

3) Seasonal Unemployment: This arises in industries that operate only during specific seasons, like agriculture or sugar industry, where workers remain unemployed during the off-season. Ex: Agricultural workers unemployed after the harvesting season.

4) Disguised Unemployment: This occurs when more people are employed than required, and some workers have zero marginal productivity, meaning their removal does not reduce output. It is common in Indian agriculture.
Ex: Extra family members working on a small farm where fewer workers are sufficient.

Question 2.
Explain the different reference periods in measuring unemployment.
Answer:
1) Usual Status (US): Measures unemployment over a reference period of 365 days preceding the survey. It is used to capture long-term or chronic unemployment. Under this, a person is classified as Principal Status (PS) if he worked for more than 183 days, and Subsidiary Status (SS) he worked occasionally or part-time during the year.

2) Current Weekly Status (CWS): Uses a 7-day reference period preceding the survey. It helps to identify short-term or temporary unemployment and weekly fluctuations in employment. A person is considered employed if they worked for at least one hour on at least one day during the week.
Ex: A young man who found gig work for 2 days in the previous week would be considered employed under CWS, even though he was jobless for the remaining 5 days of that week.

3) Current Daily Status (CDS): Considers each day of the 7 days preceding the survey . It is the most sensitive measure of labour underutilization, especially in rural and informal sectors. It records daily employment status, capturing partial and intermittent work by counting the number of days a person was employed or unemployed.
Ex: A woman who worked as a daily wage labourer for 3 days out of 7 days is recorded as employed for 3 days and unemployed for 4 days, providing a detailed view of partial and intermittent work.

Question 3.
What are the different types of poverty?
Answer:
Types of Poverty:

1. Absolute Poverty: This is a condition where individuals lack basic necessities required for survival with human dignity, such as food, water, clothing, shelter, education, and healthcare. It is mainly seen in developing countries.
2. Relative Poverty: This refers to people living below the average standard of living of their society, highlighting economic inequality and social exclusion, mostly in developed countries.
3. Generational Poverty: This is a long-term condition where poverty is passed from one generation to another, caused by lack of access to education, assets, and skills over time.
4. Situational Poverty: This is a temporary poverty caused by sudden events like natural disasters, job loss, war, or death of an earning member (Ex: COVID-19 impact).

Question 4.
Explain the Multidimensional Poverty Index (MPI), its indicators, and India’s progress from 2005-06 to 2019-21.
Answer:
Multidimensional Poverty Index (MPI): It was developed by OPHI and UNDP (2010).
In India, MPI is prepared by NITI Aayog. It is a comprehensive measure that captures multiple deprivations across various aspects of life, rather than relying only on income or consumption.

MPI Indicators:
MPI is based on three dimensions with 12 indicators (India-specific):

1. Health (3): Nutrition, Child & Adolescent Mortality, Maternal Health
2. Education (2): Years of schooling, School attendance
3. Living Standards (7): Cooking fuel, sanitation, drinking water, electricity, housing, assets, bank account. A person is considered MPI poor if deprived in three or more indicators.

Formula: MPI = H × A (Headcount Ratio × Intensity of Poverty).

India’s Progress (2005-06 to 2019-21): India has shown significant reduction in MPI.

1. Headcount Ratio: Declined from 55.34% to 14.96%
2. intensity: Reduced from 54.96% to 44.39%
3. MPI Value: Fell from 0.304 to 0.066

Improvements were seen in bank accounts, electricity, sanitation, and nutrition, though cooking fuel, housing, and nutrition still need attention.

Question 5.
Write any four poverty alleviation measures in India.
Answer:
Poverty Alleviation Measures in India:
1) Employment Generation Schemes: Employment Generation Schemes are launched to create jobs and improve income levels for the poor through wage and self-employment. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) provides 100 days (now 125 days) of guaranteed wage employment to rural households, helping reduce poverty.

2) Food Security Programmes: The Public Distribution System (PDS) supplies essential food items like rice, wheat, and sugar at subsidized prices to BPL (Below Poverty Line) and AAY (Antyodaya Anna Yojana) beneficiaries.

3) Health Schemes: The Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY) provides health insurance up to Rs. 5 lakh per family per year for hospitalization to poor families.

4) Free Education and Scholarships: The Right to Education Act, 2009 ensures free education for children (6-14 years), and Pradhan Mantri Uchchatar Shiksha Protsahan (PM-USP) provides financial assistance for higher education.

Question 6.
Summarize the inequality trends in India as analysed in the World Inequality Report 2024.
Answer:
The World Inequality Report 2024 highlights a sharp rise in income and wealth inequality in India, describing the present situation as the “Billionaire Raj” due to extreme concentration of wealth at the top.

1) Income Inequality: The top 1 % earns 22.6% of national income (2022-23) compared to 6.1% in 1982, while the bottom 50% earns only 15%. The top 10% share increased to nearly 60%, showing widening inequality.

2) Wealth Inequality: The top 1 % holds 39.5% of national wealth, and the top 0.001 % alone holds 16%, whereas the bottom 50% has only 6.5%, indicating severe disparity.

3) Surge in Billionaires: The number of billionaires increased from 70 (2014) to 271 (2024), with total wealth reaching $1 trillion.

4) Rising Gini Coefficient: Inequality has increased significantly, with income Gini rising from 0.47 (2000) to 0.61 (2022-23) and wealth Gini reaching 0.75, indicating high inequality.

Long Answer Questions

Question 1.
What is meant by unemployment ? Explain the causes of unemployment in India.
Answer:
Unemployment is defined by the ILO (International Labour Organisation) as a situation where a person is not able to find work even though they are willing to work at the prevailing market wages. It is an important indicator of economic health.

Causes of Unemployment in India:
1) Jobless Growth: Economic growth has not been accompanied by sufficient job creation. For example, even when GDP grew at 6%, unemployment remained high at 11%, indicating growth without adequate employment opportunities.

2) Rapid Population Growth: The fast increase in population leads to a rapid rise in labour force, putting pressure on the job market as employment generation does not keep pace.

3) Seasonal Nature of Agriculture: A large section of the population depends on agriculture, where workers face unemployment during the off-season, leading to seasonal unemployment.

4) Adoption of Technology and Automation: Increased use of automation and capital-intensive techniques reduces the demand for human labour, causing job losses.

5) Education-Employability Mismatch: There is a gap between skills possessed by graduates and industry requirements, resulting in low employability (around 54.8%) and underemployment.

6) Skill-Job Mismatch: While demand exists for skilled workers, a large part of the labour force is unskilled or semi-skilled, especially’in the informal sector, leading to unemployment.

7) Economic Recession and Layoffs: Economic slowdowns force firms to reduce workforce, as seen during 2008-19 and 2020-23 (COVID-19 period), increasing unemployment.

8) Underperformance of the Service Sector: Some segments of the service sector underperform globally, leading to downsizing and fewer employment opportunities, especially in industries like IT.

9) Social Barriers and Discrimination: Certain groups and women face social discrimination and limited access to employment, restricting equal job opportunities.

Question 2.
Define poverty. What are the causes and alleviation measures of poverty?
Answer:
Poverty is defined as a condition where an individual or household is deprived of the basic needs of human life. It is a multi-dimensional condition caused by lack of adequate income to afford necessities such as food, clean water, clothing, shelter, education, and healthcare.

I) Causes of Poverty in India:

1. Historical Factors: Colonial rule destroyed traditional industries and drained resources, while the zamindari system and insecure tenancy exploited farmers, leading to agricultural stagnation.
2. Population Growth: Rapid population growth puts pressure on limited resources, causing shortages of food and services, and leading to urban crowding and slums.
3.  Unemployment: Lack of employment opportunities results in no income, directly increasing poverty levels.
4. Inequalities of Wealth and Income: Unequal distribution of income and wealth deprives a large section of people of basic necessities.
5. Subdivision of Landholdings: Continuous division of land into small and uneconomical plots reduces agricultural productivity and income.
6. Inflation and Rising Cost of Living: Increasing prices make even basic necessities unaffordable for the poor.

II) Poverty Alleviation Measures:

1. Employment Generation Schemes (MGNREGA, PMEGP, NRLM, DAY-NULM): These schemes provide wage and self-employment opportunities, with MGNREGA guaranteeing up to 125 days of employment.
2. Food Security Programmes (PDS): Essential food items are provided at subsidized prices to ensure food security.
3. Health Schemes (PM-JAY): Provides health insurance up to Rs. 5 lakh per family for low- income groups.
4. Free Education and Scholarships (RTE, PM-USP): Ensures free education (6-14 years) and financial support for higher education.
5. Nutrition and Welfare Initiatives (PM-POSHAN, Ujjwala Yojana, Swachh Bharat, PMJDY): Improve nutrition, sanitation, clean fuel access, and financial inclusion.
6. Housing Schemes (PMAY): Provide housing and shelter to poor households.

Question 3.
Explain the causes of wealth and income inequalities in India.
Answer:
Causes of Wealth and Income Inequalities in India:
Wealth and income inequalities in India are the result of historical, structural, economic, and technological factors that create unequal access to resources, opportunities, and income. These actors reinforce each other and lead to a widening gap between rich and poor.

1. Historical and Structural Factors: India’s colonial past led to the destruction of traditional industries and concentration of resources in a few hands. Along with this, the caste-based social structure restricted access to land, education, and jobs for certain groups. Although post-independence policies like land reforms reduced inequalities initially, their long-term impact has weakened, and disparities continue to persist.

2. Economic Liberalization (1991 Reforms): After economic reforms, India experienced rapid growth, but the benefits were unevenly distributed. Liberalization favored capital-intensive industries and skilled labour, allowing those with capital and higher skills to earn more. Wealthy individuals could invest and accumulate more wealth, while the poor did not benefit equally, leading to rising inequality.

3. Urban-Rural Divide: Economic development has been concentrated in urban areas, where industries, infrastructure, and services are better developed. Rural areas lag behind in income opportunities and productivity. Even within cities, inequality has increased, as high-income groups benefit more from growth compared to low-income workers.

4. Education and Skill Disparities: Unequal access to quality education has created a wide gap in skills. India’s education system has often prioritized higher education, leaving many without basic skills. As a result, skilled workers earn significantly higher wages, while unskilled workers remain in low-paying jobs, increasing income inequality.

5. Digital Divide: Unequal access to technology and internet further widens inequality. Limited digital access restricts opportunities in education, employment, and financial services. For instance, low internet access in schools and among rural populations, especially women, reduces their ability to compete in a modern economy.

6. Dominance of Informal Economy: A large share of India’s workforce is employed in the informal sector, where wages are low, job security is absent, and there are no social protections. This limits income growth for the majority, while a small section involved in formal and capital-intensive sectors earns much higher incomes, widening inequality

7. Inequalities in India are caused by deep-rooted structural issues and uneven economic development, and addressing them requires policies focused on inclusive growth, equal access to education and technology, and formal employment generation.

Multiple Choice Questions

Question 1.
Disguised unemployment means:
1) Productivity of workers is low
2) Marginal Productivity of workers is zero
3) Unemployment caused by seasonal fluctuations
4) Workers are on the move from one job to the other
Answer:
2) Marginal Productivity of workers is zero

Question 2.
What is the reference period for Usual Status unemployment?
1) 365 days
2) 183 days
3) 90 days
4) 30 days
Answer:
1) 365 days

Question 3.
MPI poor refers to :
1) income poor
2) those deprived of more than 3 weighted indicators
3) deprival of non-food consumption necessities
4) deprival of health and education
Answer:
2) those deprived of more than 3 weighted indicators

Question 4.
As per the NITI Aayog, poverty rate for the year 2022-23 is :
1) 29.8 %
2) 11.8 %
3) 20.9 %
4) 33.8 %
Answer:
2) 11.8 %

Question 5.
Which of the following statements is correct in the Indian context?
1) Income inequality is more pronounced than wealth inequality
2) Wealth inequality is more pronounced than income inequality
3) Economic reforms reduced income equality but increased wealth inequality
4) Bottom 20% earn more than 50% of net personal income
Answer:
2) Wealth inequality is more pronounced than income inequality

Question 6.
Higher Gini index indicates:
1) more equality
2) more inequality
3) Perfect equality
4) Extreme poverty
Answer:
2) more inequality

Question 7.
Extreme poverty line defined by the World Bank:
1) Is globally comparable
2) Applies to lower middle-income group of countries only
3) Applies to upper middle income group of countries
4) Is country specific
Answer:
1) Is globally comparable

Question 8.
Mid-day meals is rebranded as
1) Ujjwala Yojana
2) PMAY
3) PM-POSHAN
4) PMJDY
Answer:
3) PM-POSHAN

Question 9.
Pradhan Mantri Uchchatar Shiksha Protsahan (PM-USP)
1) Is a merit-based scholarship scheme
2) Provides financial assistance to merit students from low-income families
3) Provides assistance to SC, ST, BC students of higher education based on merit
4) Provides financial assistance to low-income group students based on merit to pursue higher education
Answer:
4) Provides financial assistance to low-income group students based on merit to pursue higher education

Question 10.
PM-JAY Scheme provides:
1) free health care to all individuals aged above 70 years
2) subsidised health care to all senior citizens
3) insurance cover to all aged above 60 years
4) reimburses medical expenses of senior citizens for select diseases
Answer:
1) free health care to all individuals aged above 70 years

Fill in the Blanks

Question 1.
Rangarajan Committee estimated ____________ poverty rate than the Tendulkar committee.
Answer:
higher /greater

Question 2.
The number of weighted indicators used in Living Standards dimension of MPI index are ____________.
Answer:
6

Question 3.
India is the ____________ most equal country as per the World Inequality Report.
Answer:
4th

Question 4.
____________ is the nodal agency for estimating poverty in India, on any.
Answer:
Niti Aayog

Question 5.
Under CWS, a person is considered employed if he worked for at least ____________ on any day in the reference week.
Answer:
one hour

One Word Answers

Question 1.
What is the status other than principal status in the context of unemployment during a reference period of 365 days.
Answer:
Subsidiary status

Question 2.
In what context do you mention the phrase surge in the billionaire count?
Answer:
Inequality

Question 3.
Which Committee was constituted to revise methodology to identify BPL households?
Answer:
Saxena Committee

Question 4.
Which State has the lowest head count ratio under MPI, 20237
Answer:
Goa

Question 5.
Number of days of work guaranteed under VB-GRAM G act?
Answer:
125 days