# GSEB Class 12 Economics Important Questions Chapter 2 Indicators of Growth and Development

Gujarat Board GSEB Class 12 Commerce Economics Important Questions Chapter 2 Indicators of Growth and Development Important Questions and Answers.

## GSEB Class 12 Economics Important Questions Chapter 2 Indicators of Growth and Development

Question 1.
What happens when the supply of factors of production, their availability, productivity and efficiency increase on a continuous basis?
It leads to rise in ‘real national income’ and ‘real per capita income’ i.e. it leads to economic growth.

Question 2.
State the definition of Prof. Hansen for economic growth.
“Economic Growth refers to growth rate of national income or rise in total quantum of goods and services”.

Question 3.
State the definition of Simon Kuznets for economic growth.
“A long term increase in capacity of a country to supply diverse economic goods to its people is known as economic growth”.

Question 4.
State the two limitations of economic growth.

1. Economic growth takes into consideration only the quantitative change.
2. The concept of economic growth is narrow and reflects only the rise in the rate and extent of output.

Question 5.
State few changes that take place during economic development.
The country shows progress in economic and social structure, changes occur in the structure of national income, the contribution of agriculture as percentage of the total national income decreases whereas the contribution of industry and service sector increases, etc.

Question 6.
State the definition of development as given by Michael Todaro.
“Economic Development is a multidimensional process”.

Question 7.
State the definition of development as given by G.ivi. Meie
“Economic Development is such a process in which there is no increase in the population living below the poverty line, the Distribution of income does not further increase the inequalities and there is a continuous rise in the real per capita income of the country for a long period of time”.

Question 8.
State the definition of development as given by Machlup.
Economic Development is process which increases the factors of production and creates change in the technique of production due to which per capita income continuously increases and the standard of living continuously rises irrespective whether population remains constant or increases.

Question 9.
Why economic development is a continuous process?
It is easy for any country to start development but, difficult to maintain it. It needs to continuously review the development it gchšved and keep on putting effort to maintain the standard of living. Hence,……..

Question 10.
How can we say that demand changes during economic development?
Development tends to increase the income of the people. This changes their tastes an preferences. As a result, their demand changes.

Question 11.
How doos development leads to more capital formation?
Development leads to increase in demand for different commodities. This gives rise to new enterprises who produce such commodities. As a result, the rate of investment and capital formation increases manifolds in the country.

Question 12.
‘The way we can measure economic growth we cannot measure economic development. Why is it said so?
Economic development includes changes that took place in the society. It is very difficult to measure what changes have taken place and the quantitative method to measure them. Hence, it is said …

Question 13.
State two points of difference between economic growth and development

1. Economic growth is an occurrence while development is a process,
2. Only quantitative changes take place in economic growth whereas both quantitative and qualitative changes take place in economic development.

Question 14.
What do you mean by ‘indicator of development’?
A numerical value that ‘0hows the progress that a country has made in areas such as health, education, gender equality, etc. is known as an indicator of development.

Question 15.
Name few indicators of development.

1. Growth-rate of national income,
2. Growth rate of per capita income.
3. Physical quality of Life Index (PQLI) and
4. Human Development Index (HDD

Question 16.
Which income is considered to calculate national income?
[For calculating national incor ìe’real income is taken into consideration.]

Question 17.
Why America is more developed than India even when India’s growth rate is much faster than America?
Although India’s growth rate is quite last as compared to America, it should be noted that America has already grow’ drastically in the past. Hence …

Question 18.
State the problems experienced in calculating true national income
Problems of double counting, products produced for self-consumption, difficulties in calculating depreciation, illegal income, tax avoidance, tax evasion, barter transactions, illiteracy, employment of occupation, etc. are few of the problems experienced

Question 19.
What is the problem faced by economists when countries calculate national income with different methods?
Different methods reveal different results. Hence, it becomes difficult for economists to compare the growth in national income among different countries.

Question 20.
State the limitation of per capita income In the context of estimation it makes.
The national income is calculated almost every year and hence we get quite a correct data but the population of the country is not calculated every year. In India population census takes place once in 10 years. So, for the remaining 9 years we just take approximation of the population. This is a major limitation.

Question 21.
What is the problem related to ‘average’ in case of per capita income?
We get per capita income simply by dividing national income with population. This means that per capita income shows only average income. This does not mean that every individual is earning the said per capita income.

Question 22.
Why per capita as an indicator is more effective than national income as an indicator?
The ‘per capita income’ takes into consideration the population which national income does not. Hence, this indicator of development is superior to the ‘national income’.

Question 23.
Name four aspect of physical quality of life.

1. Food (Calories, protein fats) Proportion,
2. Health and Medical services (Proportion of doctor to population)
3. Housing and clothing (Number of rooms in a house, average number of people lMng in each room) and
4. Average life expectancy.]

Question 24.
When can one say that the physical quality of life has improved?
[When the 10 aspects or determinants of physical quality of life improve we can say that there is improvement in the physical quality of human life.

Question 25.
What is life expectancy?
[Number of years a child is expected to live at the time of birth of a child Is known as life expectancy. It shows the average life of the child born.

Question 26.
State the formula for PQLI.
Physical Quality of Life Index = $$\frac{\text { Literacy rate + Infant mortality rate index }+\text { Life expectancy index }}{3}$$

Question 27.
AIl the three indicators of PQLI are measured between 0 and 100. What is the problem with this?
It is not right to give equal weightage of 100 to all indicators of POLI because all three aspects do not have same importance in human life.

Question 28.
Which is the latest indicator of development? Who introduced it? When?
Human Development Index (HDI); When United Nations Development Programme (UNDP) presented the Human Development Report (HDR) in 1990 at that time it introduced Human Development Index as a measure of development.

Question 29.
Give an introduction of HDR-201 5.
The Human Development Report (HDR) of 2014 was published in 2015. The report gave HDI for 188 countries. It classd these countries into four parts on the basis of human development.

Question 30.
Give an idea about the first part of the HDR-2015.
The countries having ‘maximum development’ were included in first part. The average value of HDI of 1 St to 49th ranking countries falling in this part was 0.890.

Question 31.
Give an idea about the second part of HDR-201 5.
The countries having ‘high development’ were included in second part. The average value of HDI of to 105th ranking countries was 0.735.

Question 32.
Give an idea about the third part of HDR-2015.
The countries having ‘moderate development’ were included in third part. The average value of HDI of 106th to 143rd ranking countries was 0.614.

Question 33.
Give an idea about the fourth part of HDR-2015.
The countries having ‘low development’ were included in fourth part. The average value of HDI of 44’to 188th ranking countries is 0.493.

Question 34.

1. HDI includes economic factors as well as social welfare by giving importance to education and health. This makes HDI the best and complete in its own so far,
2. By studying the HDI, developing countries get an idea as to where there is scope for development and in which directioi should the government work.

Question 35.
State two limitations of HDI.

1. HDI includes only three social indicators. It should also include other social indk.aors,
2. All three indicators are given equal weightage. But in reahty, with respect to time and situation different indicators may have different importance.

Question 1.
The most important objective of the various countries of the world after the 2nd World War has been the attainment of economic development. Explain. OR The nucleus of all economic thinking especially after the 2nd World War has been the attainment of economic development. Explain. When did the countries realize the need of economic growth and development as the only source of survival?

• The terms ‘economic growth and ‘economic development’ have become popular after the 2nd World War i.e. after 1944.
• The economy of the most of the countries got ruined after the Second World War. There was no alternative to growth and development for countries’ survival of the countries.
• The developing countries like India started making efforts to solve problems like unemployment, poverty, hunger deaths, inequalities of income and wealth distribution, etc.
• The developing countries started making attempts to reduce the gap in per capita income level of developing and developed countries.
• Developing countries became more aware for attaining development and increasing the standard of living of their people.
• It should be well remembered that the need for economic development then and even today exists for both developing and developed countries but, for different reasons. Developing countries aim at improving the standard of living of the people by reducing poverty and unemployment while the developed countries aim at maintaining the prevailing higher standard of living.

Question 2.
What do you mean by economic growth? Explain.

• When we use the term ‘growth’ it means we are talking about ‘economic growth’.
• The increase in the total output of an econom, n the long run is known as economic growth.
• By total output mean that there is a continuous increase in the real national income and th&real per capita income which we call as economic growth.
• Such growth is possible due to the increase in supply of factors of production like, land, capital, labour and entrepreneurial ability of the people and increase in the productivity of these factors.
• When the supply of factors of production, their availability, productivity and efficiency increase on a continuous basis it leads to rise n ‘real national income’ and ‘real per capita income’. This rise is known as economic growth. Since, rise in income can be measured numerically and also seen we consider economic growth as a ‘quantitative change’.
• One can gauge a country’s economic status by knowing its economic growth. Rate of economic growth also helps to compare the economies of two countries.

Question 3.
State the various definitions of economic growth as given by economists.
Definition of Prof. Hansen:
“Economic Growth refers to growth rate of national income or rise in total quantum of goods and services”.

Definition of Simon Kuznets:
“A long term increase in capacity of a country to supply diverse economic goods to its people is known as economic growth”.

Question 4.
Explain briefly economic development.
1. When there is continuous rise in total output by the means of real national income and real per capita income of the economy i.e. quantitative aspects along with rise in qualitative aspects it is called economic development.

2. Economic development is a much wider concept as compared to ‘economic growth’. It is a continuous and multidimensional process which includes economic growth, economic welfare and economic progress.
Changes experienced in a country under economic development:

3. When we say that economic development is taking place it means that apart from monetary aspect the country is also showing progress in economic and social structure.

Thus, during economic development, along with economic progress, progress takes place in the society too.

4. Change is seen even in the structure of national income. The contribution of agriculture as percentage of the total national income decreases whereas the contribution of industry and service sector increases.
The disguised unemployed of agricultural sector get employed in other sectors.

5. The country starts using modern technology which saves time and money and hence productivity increases.
The country also innovate various new seeds for agriculture. This changes institutional structure which then changes the methods of production and distribution.

6. Slowly and gradually there is reduction in poverty, unemployment and inequalities.

Question 5.
State the definitions of economic development as given by various economists.

1. Definition of Michael Todaro: “Economic development is a multidimensional process”.
2. Definition of G.M. Meier: “Economic development is such a process in which there is no increase in the population living below the poverty line, the distribution of income does not further increase the inequalities and there is a continuous rise in the real per capita income of the country for a long period of time”.
3. Definition of Machlup: “Economic development is process which increases the factors of production and creates change in the technique of production due to which per capita income continuously increases and the standard of living continuously rises irrespective of whether population remains constants or increase”.

Question 6.
What kind of changes does a country under economic development experiences?

1. Definition of Michael Todaro: “Economic development is a multidimensional process”.
2. Definition of G.M. Meier: “Economic development is such a process in which there is no increase in the population living below the poverty line, the distribution of income does not further increase the inequalities and there is a continuous rise in the real per capita income of the country for a long period of time”.
3. Definition of Machlup: “Economic development is a process which increases the factors of production and creates change in the technique of production due to which per capita income continuously increases and the standard of living continuously rises irrespective of whether population remains constants or increase”.

Question 7.
State and explain the characteristics of economic development.
Characteristics of economic development:
1. Economic development is a continuous process:

• Economic development is a slow but strong process in a predetermined order and direction.
• It is easy for any country to start development but, difficult to maintain it.
• In the initial period one can see a quick rise in development but once a country reaches a specific level of development it then shows slower development.

2. Quantitative and qualitative change takes place:
In economic development, output which is a quantitative change increases. Due to research and innovation, the quality of the products which is a qualitative aspect also improves. But, it should be noted that there is more of qualitative improvement rather than quantitative.

3. Demand changes:

• Development tends to increase the income of the people. This changes their tastes and preferences.
• For example, in the initial stages of development, people demand more of basic or primary goods but, later they start demanding goods of comfort and luxury.

4. Labour become more dynamic:
Development leads to increase in education of labour which makes it more dynamic.

5. Increases capital formation:

• Development leads to increase in demand for different commodities.
• This gives rise to new enterprises who produce such commodities. As a result, the rate of investment and capital formation increases manifolds in the country.

6. Change in technology:
There is a shift in dependence from fire and water based i.e. traditional technology to coal and iron based i.e. modern technology. This results in faster development.

7. Self-motivated development:
After a particular stage, development becomes habit of people and hence it is self-motivating.

Question 8.
Differentiate between economic growth and economic development.

 Economic growth Economic development 1. Economic growth is an occurrence 1. Economic development is a process 2. In economic growth quantitative change occurs. 2. In economic development both quantitative and qualitative change takes place. 3. It emphasizes on the distribution of available resources. 3. It emphasizes on utilizing the unutilized resources. 4. Economic growth is related to developed countries. 4. The concept of economic development is related to developing countries. 5. It is easy to measure economic growth. 5. it is quite difficult to measure economic development. 6. The concept of growth is narrow. 6. The concept of development is broad. 7. Economic growth is only related to increase in per capital income. 7. Economic development is related to distribution along with per capita income. 8. Economic growth is a fast process. 8. Economic development is a slow process. 9. Economic growth is possible without economic development. 9. Economic development is not possible without economic growth.

Question 9.
What do you mean by indicators of development? Explain.
Indicators of development:

• A numerical value that shows the progress that a country has made in areas such as health, education, gender equality, etc. is known as an indicator of development.
• These indicators work as measuring rod or standards to understand whether a country has made progress or not and if yes then how far.
• These indicators which measure the rate of economic development and its extent can be presented in numerical and statistical terms.
• Moreover, these indicators also help to compare the development of two or more countries.
• The way thermometer measures the changes in the temperature of human body and records it, development indicators measure and records development of the country.

Some of the indicators of economic development are:

1. Growth-rate of national income
2. Growth-rate of per capita income
3. Physical Quality of Life Index (PQLI)
4. Human Development Index (HDI)

Question 10.
What problems does a country face while calculating the true national income?
Difficulty in calculating the true national income:
Problems of double counting, products produced for self-consumption, difficulties in calculating depreciation, illegal income, tax avoidance, tax evasion, barter transactions, illiteracy, employment of persons in more than one occupation, etc. make it difficult to estimate the true national income of the country. Hence national income cannot be considered as a true measuring rod of the rate of economic development of a country.

Question 11.
National income is not a true indicator of economic development because it ignores population. Explain.
Population:

• One cannot understand the rate of economic development just by knowing the national income of the country. The extent of population of the country should also be known.
• By considering population we can say that if the rate of growth of national income is lesser than the rate of growth of population, then development is in negative. Similarly, if the rate of growth of national income is higher than the rate of growth, of population, then the rate of economic development is positive.
• Since, the method of national income does not consider the population and its growth, this indicator of development is not the true indicator of economic development.

Question 12.
What is the problem with calculating national income with various methods?
Different methods of calculating national income:
There are different methods used to calculate national income across the world. The most important among them are:
(a) Production method,
(b) Income method and
(c) Expenditure method.

• The measurement of national income varies based on the method of calculation used by the country.
• Different countries adopt different methods to calculate national income. Hence, comparing the economic development through national income as an indicator becomes difficult.

Question 13.
Population is not counted every year but per capita income is Explain the problem with this.
Only estimates:

• The national income of the economy is calculated almost every year and hence we get quite a correct data but the population of the country is not calculated every year.
• In India population census takes place once in 10 years. So, for the remaining 9 years we just take approximation of the population.
• Per capita income is obtained by dividing gross national income with population. Since, we do not get exact count of population every year, per capita income gives us an estimated figure for all those years when we do not count population.

Question 14.
Lack of equitable distribution of per capita income makes it an incomplete indicator of development. Explain. OR Per capita income is only an average. Explain.
Per capita income shows only an average:

• We get per capita income simply by dividing national income with population. This means that per capita income shows only average income.
• We cannot decide at which stage our development is just on the basis of this average.
• If the income distribution among the population has taken place equitably then we can say that rise in per capita income shows development. However, if equitable distribution has not taken place then rise in per capita income does not mean increase in economic development. Hence, per capita income as an indicator of development is not truly appropriate.

Question 15.
Why does it become a pain in the neck to compare per capita income of different countries?
Difficulty in comparison:
1. Countries express their per capita income in their own currency. This makes it difficult to compare at international level.

2. So, to compare per capita income of various countries, it will have to be first converted into US dollar. Once done, we can compare the economic development of different countries.

3. Moreover, different countries of the world have put different controls on their exchange rates. Hence, real exchange rate cannot be known. So, it is not possible to make real comparison between countries.

Question 16.
State the determinants included in the list of goods and services for physical quality of life.
Physical Quality of Life:
1. Physical quality of life in human beings depends on the different types of goods and services that a person consumes over a period of time.

2. The ‘standard of consumption’ refers to the consumption of goods and services by a person or group of people during a given period of time.

The consumption includes:

• Consumption of food, fuel and other non-durable goods
• Consumption of durable and semi durable goods
• Consumption of service goods/use of services

3. The standard of consumption or say the standard of living determines the physical quality of life.

4. If the living standard of the people goes up, it can be said that physical quality of life has gone up.
Aspects included in the Physical Quality of Life:

5. The composition of goods and services consumed by an individual during a period of one year determines the physical quality of life.

Following are the determinants included in the list of goods and services:

1. Food (Proportion of calories, protein and fats)
2. Health and medical services (Proportion of doctor to population)
3. Housing and clothing (Number of rooms in a house, average number of people living in each room, etc.)
4. Education and entertainment (percentage of population getting primary secondary, education, entertainment facilities like TV, theatre, etc.)
5. Transport, communication and information services (the extent of road, railway lines, number of telephones per capita.)
6. Energy (Per capita energy consumption)
8. Average life expectancy
9. Infant mortality rate
10. Drainage facility

If there is an improvement in these 10 aspects or determinants then we can say that there is improvement in the physical quality of human life.

• On the contrary, if improvement has not taken place then these determinants can be studied and it can be analyzed as to where improvement is needed and remedial measure to be adopted to increase the rate of development.
• Every indicator can be relatively expressed. The value of each indicator is equally expressed on a scale of 0 to 100.
• The indicator which has the highest value is given 100 points.
• Note that developed countries give more importance to improve the physical quality of life.

Question 17.
What do you mean by literacy level?
Morris included three indicators or say determinants for measuring the physical quality of life. These three determinants are:

1. Literacy,
2. Life expectancy and
3. Infant mortality rate.

Thus, PQLI = Literacy level + Life expectancy index + Infant mortality index.

After 2003, three more aspects were included in PQLI and Quality of Life Index (QLI) was prepared in the world.

Question 18.
What is infant mortality rate?
Physical Quality Life Index (PQLI):
1. Increase in national income and per capita income has a number of limitations. Hence, these two are not the real indicators of economic development.

2. If the income of the country has increased but if the rise is seen only by a limited class of people then it cannot be termed as development.

3. The development of a country should be such that the living standards of the poor rise and the basic requirements of the citizens are fulfilled.

4. Keeping these things in mind Morris Davis Morris developed the Physical Quality of Life Index (PQLI).

5. PQLI attempts to measure the quality of life or well-being of a country. This index refers betterment of physical quality of life of human beings as economic development.

6. In order to derive the index of PQLI, the level of physical quality of life i.e. PQL is determined through various indicators.

7. If a country’s physical quality of life is higher than that of the other country, then that country is considered as more developed.

8. Morris included three indicators or say determinants for measuring the physical quality of life. These three determinants are:

1. Literacy,
2. Life expectancy and
3. Infant mortality rate.

Thus, PQLI = Literacy level + Life expectancy index + Infant mortality index.

After 2003, three more aspects were included in PQLI and Quality of Life Index (QLI) was prepared in the world.

Question 19.
Why did Morris select only three determinants in the index for physical quality of life?
Reasons for only three determinants in the Physical Quality of Life Index (PQLI):
Morris had included only three determinants namely literacy level, life expectancy and infant mortality for calculating PQLI. The reason for this is as follows.

1. We can get reliable data of all these three determinants for all the countries.
2. All these factors (determinants) tells about the the results and not just the efforts.
3. All these three factors are object oriented and hence can fulfill the justifiable standards for performance comparison.

Question 20.
State the importance of the three determinants in PQLI.
Importance of determinants of PQLI:
(a) Literacy:

• Literacy is a very important measuring rod for measuring physical quality of life.
• Increase in literacy and education shows rise in the welfare of an individual. Educated and skilled humans are a necessary aspect for a national development.

(b) Life expectancy:

• Increase in life expectancy is the reflection of improvement in social condition and wellbeing.
• Increase in life expectancy is a result of proper nutrition, medical care and better environment.

(c) Infant mortality rate:

• It is the reflection of social status and welfare.
• It reflects availability of pure drinking water, environment of the house, status of women and mother’s role.

Question 21.
Explain briefly the method to calculate PQLI.
Formulation of physical Quality of Life Index (PQLI):

• Three indicators namely, literacy, life expectancy and infant mortality rate together form the index for physical quality of life.
• Each indicator is measured on the scale of 1 to 100 where 1 represents the worst performance by any country and 100 is the best performance.

Steps to calculate Physical Quality of Life Index:

1. Find percentage of the population that is literate (literacy rate)
2. Find the infant mortality rate
3. Find the life expectancy
4. Physical Quality of Life Index = $$=\frac{\text { Literacy rate }+\text { Infant mortality rate index }+\text { Life expectancy index })}{3}$$

Question 22.
State the important aspects of physical quality of life index.
Importance aspects of the index of physical quality of life:

• For any country, as the value of PQLI approaches 100, better becomes the performance of all the 3 indices of PQLI of that country.
• PQLI approaching 0 indicates that the performance of all the 3 indices of PQLI of the country is bad.
• PQLI is always between 0 to 100.
• PQLI can be used to compare two states within the country or two different countries.
• Higher the PQLI more is the economic development.
• Lower the PQLI, lesser is the economic development.

Question 23.
List out the positive aspects of PQLI.
Positive aspects of PQLI:

• PQLI includes factors associated with standards of human life such as like literacy, life expectancy, etc.
• PQLI is a better index when compared to the per capita income index.
• PQLI as an indicator of economic development has lesser drawbacks compared to national income and per capita income.
• With PQLI comparisons can be made between different countries, different groups of countries or even different states of the same country.
• We can create PQLI for urban-rural areas, females-males and then compare, them.

Question 24.
Give an introduction of the most recently developed indicators of development. OR What is HDI? Explain briefly.
Human Development Index:

• The most recent indicator of development is the Human Development Index.
• When United Nations Development Programme (UNDP) presented the Human Development Report (HDR) in 1990, it also introduced Human Development Index as a measure of development.
• HDI emphasized on both economic as well as non-economic measures. Indian economists have also made a major contribution in preparing HDI.
• The index is prepared by calculating the efforts made by each country for country’s development.
• Improvements were introduced in the year 2010 in the minimum and maximum values which were used to measure HDI since 1990.

Question 25.
State the important aspects of HDI.
important aspects of HDI:

• The value of HDI ranges from 0 to 1.
• The maximum value of HDI is 1 which is based on three standards namely life expectancy, knowledge and good standard of living.
• The country whose HDI data is closer to 1 is considered more developed. It gets higher ranking in HDI.
The country whose HDI value is away from 1 is considered less developed. It gets lower ranking in HDI.
• According to data of 2014 out of 188 countries, Norway ranked number 1 with 0.944 points while India ranked 130th with 0.609 points.

Question 26.
Explain standard of living as an indicator of HDI.
Determinants of Human Development Index:

• To keep things simple, HDI is prepared using three factors namely,
1. Life expectancy,
2. Education and
3. Income.
• Life expectancy refers to the expected number of years a child will live at the time of birth, data on education depicts social achievements whereas income data depicts the standard of living.
• Note that while calculating HDI instead of considering absolute values, average of all the three values is measured.

Question 27.
How is knowledge level assessed for developing HDI?
Determinants of Human Development Index:

• To keep things simple, HDI is prepared using three factors namely,
(1) Life expectancy,
(2) Education and
(3) Income.
• Life expectancy refers to the expected number of years a child will live at the time of birth, data on education depicts social achievements whereas income data depicts the standard of living.
• Note that while calculating HDI instead of considering absolute values, average of all the three values is measured.

Question 28.
How does HDR-2015 divide the world countries? What do you analyse from the report?
The Human Development Report (HDR) of 2014 was published in 2015. The report gave HDI for 188 countries. It classified these countries into four parts on the basis of human development.

They are:

1. Countries having highest (maximum) human development: The average value of HDI of 1st to 49th ranking countries was 0.890.
2. Countries having high human development: Average value of HDI of 50,h to 105th ranking countries was 0.735.
3. Countries with moderate human development: Average value of HDI of 106th to 143rd ranking countries was 0.614.

Countries having low human development:

• Average value of HDI of 144th to 188th ranking countries was 0.493. Analysis of the HDI pf 2015:
• Norway stood at number 1 position with HDI of 0.944.
• Out of 188 countries India stood at 130th position with HDI of 0.609.
• Comparing India’s position with the four divisions given above we can say that India comes in the category of countries with moderate human development.
• Niger in Africa has an HDI of 0.348 and comes last in the order of HDI of 2015.

Question 29.
State the importance of Human Development Index.
Importance of Human Development Index (HDI):

• HDI includes economic factors as well as social welfare by giving importance to education and health. This makes HDI the best and complete in itself so far.
• HDI indicates the policy makers that economic development is just a tool and that the ultimate objective of development is human welfare.
• According to HDI, True progress = Economic progress + Social progress. HDI works as a function. Rise in the HDI ranking indicates that health and education have improved in the country.
By studying the HDI, developing countries get an idea as to where there is scope for development and in which direction should the government work.
• HDI is progressive in its approach.

Question 30.
State the limitations of Human Development Index.
Limitations of HDI:

• HDI includes only three social indicators. It should also include other social indicators.
• All three indicators are given equal weightage. But in reality, with respect to time and situation different indicators may have different importance.
• Human Development Index is not an absolute expression. Since it compares one country with the other it shows relative progress. So, one cannot say how far has India developed individually by studying the HDI.

Question 31.
State the various indices to measure development of a nation.
The various indices to measure development of a nation are;

1. PQLI – Physical Quality of Life Index
2. HDI – Human Development Index
3. GDI – Gender Development Index
4. TAI – Technological Achievement Index
5. HPI – Human Poverty Index
6. HCI – Human Consumer Index

Question 32.
Developed countries aim at maintaining economic growth while developed countries aim at attaining speedy economic development. Explain.
1. As per economics, first a county increases its output, national income and per capita income. Rise in these indicators gives the country the title of developing country.

2. Huge population, large scale unemployment, poor infrastructure, less level of literacy and not so good health facilities are the characteristics of a developing nation. Such nations first need to increase national income and per capita income so that there is more supply of money in the economy.

3. In the second stage the developing countries aim at achieving development. They try to improve the standard of living of people by providing them health and education facilities, opportunities to earn more income, etc. When they achieve these they fall into the category of developed nation.

4. The developed nations are called developed because they have already reached a very high economic growth as well as development. After reaching a certain level the growth does not rise as fast as in the case of developing nations.

The focus of developed nations is then to maintain the standard of living i.e. the development it has achieved. To maintain this, the nations’ economic growth-rate should be maintained.

5. Hence, the developed nations aim for economic growth whereas the developing nations aim for economic development.

Multiple Choice Questions

Question 1.
The most important objective of the countries of the world especially after World war-II has been
(A) Economic development
(B) Economic gain
(C) Social welfaie
(D) Economic and political stability
(A) Economic development

Question 2.
Since when did the terms ‘economic growth’ and ‘economic development’ caught eyes of the world?
(A) After 1914
(B) After 1944
(C) After 1919
(D) After 1947
(B) After 1944

Question 3.
Developing countries: Economic development; Developed countries:
(A) Social welfare
(B) Economic growth
(C) Economic development
(D) Both (A) and (B)
(B) Economic growth

Question 4.
Economic growth means long run
(A) Rise in standard of living
(B) Rise in total output of the country
(C) Important in social infrastructure as well as per capita income
(D) Both (A) and (C)
(B) Rise in total output of the country

Question 5.
What rises on a continuous basis in a developing country?
(A) Real national income
(B) Gross national income
(C) Real per capita income
(D) Both (A) and (C)
(D) Both (A) and (C)

Question 6.
“Economic growth refers to growth rate of national income or rise in total quantum of goods”. Whose opinion is this?
(A) Simen Kuznets
(B) Micheal Todaro
(C) Urshula Hicks
(D) Prof. Hansen
(D) Prof. Hansen

Question 7.
What does not take place in economic growth?
(A) Qualitative changes
(B) Institutional changes
(C) Psychological factors
(D) All of these
(D) All of these

Question 8.
Economic growth ignores
(A) Welfare
(B) National income
(C) Per capita income
(D) Output
(A) Welfare

Question 9.
Economic development aims at
(A) Economic growth
(B) Economic progress
(C) Economic welfare
(D) All of these
(D) All of these

Question 10.
What does not change during economic development?
(A) Social structure
(B) Production techniques
(C) Structure of national income
(D) None of these
(D) None of these

Question 11.
As per Michael Todaro,
(A) Economic development is such a process where there is no increase in the population living below poverty line.
(B) Economic development increases the factors of production.
(C) Economic development is a multidimensional process.
(D) Economic development is a long term increase in capacity of a country.
(C) Economic development is a multidimensional process.

Question 12.
Which of the following is not a characteristic of economic development?
(A) Change in technology
(B) Qualitative and quantitative changes occur
(C) It is a onetime process
(D) Labour becomes more dynamic
(C) It is a onetime process

Question 13.
After a stage, economic development
(A) Becomes self-motivating
(B) Needs more thrust
(C) Fades and growth takes over
(D) Becomes stagnant
(A) Becomes self-motivating

Question 14.
What can economic development not indicate?
(A) Rise in national growth
(B) Improvement in human progress
(C) Improvement in education structure
(D) Rise in total output
(B) Improvement in human progress

Question 15.
It is quite possible that, economic development
(A) Prosperity
(B) Growth in income
(C) Improved standard of living
(D) Reduction in poverty
(C) Improved standard of living

Question 16.
Which of the following is not an indicates of development?
(A) PQLI
(B) Rate of growth of national income
(C) HDI
(D) None of these
(D) None of these

Question 17.
As per World Bank, the growth rate of national income of Sri Lanka in 2015-16 was %.
(A) 2.4
(B) 4.7
(C) 4.5
(D) 7.3
(C) 4.5

Question 18.
_______ showed second highest growth rate in national income of 2015-16.
(A) China
(B) America
(C) Sri Lanka
(D) Germany
(B) America

Question 19.
Norway and America grow by per annum as per World Bank and Economic survey of 2015-16.
(A) 1 – 1.5%
(B) 2.4 – 4.5%
(C) 3 – 5%
(D) 2 – 3%
(D) 2 – 3%

Question 20.
Which of the following is not a problem for calculating true national income?
(A) Tax avoidance
(B) Double counting
(C) Barter transactions
(D) None of these
(D) None of these

Question 21.
Which is the most suitable method of calculating national income?
(A) Production method
(B) Income method
(C) Expenditure method
(D) Can’t say
(D) Can’t say

Question 22.
Who has recommended per capita income as an indicator of economic development?
(A) UNO
(B) WB
(C) WHO
(D) RBI
(A) UNO

Question 23.
Development is not a development in true sense if
(A) It does not increase economic infrastructure
(B) If does not increase GDP
(C) It does not improve the standard of living
(D) If does not increase social status
(C) It does not improve the standard of living

Question 24.
America : $52,947; Norway :$ ____
(A) 47,293
(B) 51,329
(C) 68,191
(D) 64,992
(D) 64,992

Question 25.
China : $12,547; India :$ ____
(A) 5497
(B) 11,230
(C) 4866
(D) 14,256
(A) 5497

Question 26.
____ income growth rate of India :
(A) 2.6
(B) 6.0
(C) 0.5
(D) 1.1
(B) 6.0

Question 27.
Norway’s per capita income in 2015-16 was _______ times higher than India.
(A) 3-4
(B) 11-12
(C) 9
(D) 6-8
(B) 11-12

Question 28.
Limitation of per capita income as an indicator is that
(A) It shows only average
(B) It ignores income of poor class
(C) It does not include earning of non-productive age
(D) Per capita income reveals more than necessary
(A) It shows only average

Question 29.
Consumption of what determines the living standard as per physical quality of life?
(A) Food, fuel and other non-durable goods
(B) Durable and semi-durable goods
(C) Services during a period of time by a person
(D) All of these
(D) All of these

Question 30.
Which aspect is not include in physical quality of life?
(A) Housing and clothing
(B) Calories, fats and proteins consumed
(C) Entertainment
(D) Number of holidays per year
(D) Number of holidays per year

Question 31.
Physical quality of life considers aspects.
(A) 3
(B) 5
(C) 7
(D) 10
(D) 10

Question 32.
Who developed PQLI?
(A) Morris
(B) Machlup
(C) Todaro
(D) Hansen
(A) Morris

Question 33.
Which of the following is not a determinant of PQLI?
(A) Extent of education
(B) Infant mortality rate
(C) Life expectancy
(D) Per capita income
(D) Per capita income

Question 34.
Which of the following is the correct reason for only three determinants in PQLI?
(A) All the three determinants selected depicts the results and not efforts
(B) Dependable data for all these factors can be obtained for all the countries
(C) All the three factors are product based
(D) All of these
(D) All of these

Question 35.
Maximum point that a determinant of PQLI can get is
(A) 1
(B) 10
(C) 100
(D) 3
(C) 100

Question 36.
PQLI lies between _______
(A) -10 to 10
(B) 0 to 100
(C) 0 to 10
(D) -100 to 100
(B) 0 to 100

Question 37.
PQLI _______ Development
(A) High, high
(B) Low, high
(C) High, low
(D) Both (B) and (C)
(A) High, high

Question 38.
Which of the following is best?
(A) Economic growth
(B) Economic development
(C) HDI
(D) PQLI
(C) HDI

Question 39.
PQLI ignores _______
(A) Income
(B) Infant mortality
(C) Education
(D) Life expectancy
(A) Income

Question 40.
Who gave HDI?
(A) UNO
(B) Morris
(C) UNDP
(D) WTO
(C) UNDP

Question 41.
HDI was presented in the Human Development Report of
(A) 1944
(B) 2001
(C) 1979
(D) 1990
(D) 1990

Question 42.
When were improvements introduced in the minimum and maximum values of HDR?
(A) In 2010
(B) In 2001
(C) In 2000
(D) In 2003
(A) In 2010

Question 43.
Which of the following is incorrect with respect to HDI?
(A) Life expectancy
(B) Good standard of living
(C) Knowledge
(D) Infant mortality
(D) Infant mortality

Question 44.
To calculate the rate of education to be included in HDI, people in the age group of or above are included.
(A) 21
(B) 15
(C) 14
(D) 18
(B) 15

Question 45.
According to data of 2014, Norway’s HDI was
(A) 0.944
(B) 0.609
(C) 0.912
(D) 0.875
(A) 0.944

Question 46.
India : 0.609; Pakistan : _______
(A) 0.727
(B) 0.701
(C) 0.348
(D) 0.538
(D) 0.538

Question 47.
The HDI of 2015, classified countries into groups.
(A) 2
(B) 3
(C) 4
(D) 6
(C) 4

Question 48.
in 2014, India ranked In HDI.
(A) 127th
(B) 130th
(C) 142nd
(D) 136th
(B) 130th

Question 49.
Which country comes at the last in HDI of 2015?
(A) Sri Lanka
(B) Pakistan
(C) Niger
(D) Turkistan