Test: Basic Issues in Economic Development- 2 - B Com MCQ

An underdeveloped economy is characterized by a high rate of population growth. This means that the population is increasing at a rapid pace, which can put pressure on resources and hinder economic development. India's population has been increasing at an alarmingly high rate, resulting in population explosion. This population growth can lead to a decline in per capita resources and productivity. It is important for underdeveloped economies to address population growth in order to achieve sustainable development.

The main occupation of the majority of people in underdeveloped countries is agriculture. In India, about 65% of the population is dependent on agriculture. This indicates that agriculture plays a significant role in the economy of underdeveloped countries. It is important to note that in developed economies, a smaller proportion of the population is dependent on agriculture, as industrial and service sectors dominate. The heavy concentration in agriculture in underdeveloped countries is often a reflection of poverty and limited opportunities in other sectors.

The main reason for the predominance of agriculture in underdeveloped countries is the lack of capital. Due to a shortage of capital, industries in underdeveloped countries are not able to expand at a fast enough rate, leading to a heavy concentration in agriculture. This concentration is often a reflection of poverty and limited opportunities in other sectors. It is important to note that the lack of capital also hinders technological development and the adoption of modern methods of production in agriculture, contributing to low agricultural productivity in underdeveloped economies.

The characteristic of an underdeveloped economy that is a result of deficiency of capital is unemployment and underemployment.Due to a shortage of capital, there is a tendency to invest available capital in labor-intensive consumer goods industries rather than in capital-intensive capital goods industries. This shortage of capital hinders the expansion of industries and the absorption of the entire labor force, leading to widespread unemployment and underemployment. It is important for underdeveloped economies to address the deficiency of capital in order to create more employment opportunities.

The main characteristic of a dualistic economy in underdeveloped countries is the coexistence of modern and traditional sectors. The modern sector comprises large-scale industry, mines, and plantations, which are well-organized, highly monetized, and use modern techniques of production. On the other hand, the traditional sector mainly comprises agriculture and is confined to rural areas. It is characterized by self-sufficiency, limited use of money, and outdated methods of production. This dualism in the economy reflects the disparity between the developed and undeveloped parts of the country.

A common feature of the demographic pattern in underdeveloped countries is a large proportion of the population in the younger age group. In underdeveloped countries like India, a significant percentage of the total population is below 15 years of age. This indicates a higher fertility rate and a younger population compared to developed countries. It is important to note that this demographic pattern can have implications for economic growth, as it may result in a larger dependent population and limited resources for investment and development.

The main reason for the low per capita income in underdeveloped countries is the inequitable distribution of wealth and income. In underdeveloped countries like India, there is a concentration of wealth and economic power in the hands of a few, leading to income inequalities. This results in a low per capita income for the majority of the population. The low per capita income is reflected in the low standards of living and high levels of poverty. Addressing income inequalities is crucial for improving the per capita income and overall development in underdeveloped economies.

A characteristic of an underdeveloped economy resulting from technical backwardness is the predominance of agriculture. Technical backwardness refers to the absence of technological development and the continued use of old, outdated, and primitive methods of production. This hinders agricultural productivity and keeps the majority of the population dependent on agriculture. In underdeveloped countries, agriculture often remains unproductive and carried out in an old-fashioned way. It is important for underdeveloped economies to focus on technological advancement and modernization of methods in agriculture to improve productivity and reduce dependence on the sector.