National Income, Poverty and Unemployment (VSAQs)
Economics-2 | 3. National Income, Poverty & Unemployment – VSAQs:
Welcome to VSAQs in Chapter 3: National Income, Poverty & Unemployment. This page covers the most important FAQs for Very Short Answer Questions. Each answer is given in simple English and follows the exam format. This approach helps you focus on essential topics and aim for top marks in your final exams.
VSAQ-1: National Income
National Income is like the big picture of a country’s economic activity. It’s the total value of everything produced within a nation’s borders over a specific period, usually a year. This includes all goods and services from various sectors—like agriculture, industry, and services. Think of it as adding up all the incomes earned by people, businesses, and the government, including wages, profits, rents, and taxes. By looking at the national income, we get a clear idea of how well a country’s economy is doing and how productive its people are.
VSAQ-2: Per Capita Income
Per Capita Income is a way to understand the average income of each person in a country. Imagine taking all the money earned in a country (the national income) and dividing it by the number of people living there. This gives you the per capita income, which helps measure the standard of living. For example, if a country’s total income is spread thin because of a large population, the per capita income might be lower, indicating that people might have less money on average to spend on their needs. This measure is useful when comparing the economic well-being of different countries or regions.
VSAQ-3: Unemployment
Unemployment happens when people who are willing and able to work at the current wage rates can’t find jobs. This situation occurs when there are more people looking for work than there are available jobs. Unemployment can take different forms, such as when people are between jobs (frictional unemployment), when industries decline (structural unemployment), during economic downturns (cyclical unemployment), or when work is only available during certain seasons (seasonal unemployment). Reducing unemployment is a major goal for governments because having a job is key to people’s financial stability and overall well-being.
VSAQ-4: Educated Unemployment
Educated Unemployment is a frustrating situation where people with higher education and qualifications can’t find jobs that match their skills. This is a common issue in developing countries like India, where there may not be enough high-skilled jobs for all the graduates. Imagine someone with a university degree who ends up working in a job that doesn’t require their education. This mismatch can lead to dissatisfaction and underutilization of talent. Addressing educated unemployment involves improving education systems, creating more job opportunities, and ensuring that people’s skills align with what the job market needs.
VSAQ-5: Disguised Unemployment
Disguised Unemployment occurs when a person’s work isn’t really contributing much to the overall productivity. For example, in a small family farm, there might be more people working than necessary to get the job done. If one person stops working, the farm’s output doesn’t decrease, showing that their contribution was minimal. This type of unemployment is common in agriculture and informal sectors, where there’s surplus labor that could be more effectively used elsewhere.
VSAQ-6: Non-employment
Non-employment refers to people who are involved in essential activities like household chores or caregiving but don’t get paid for their work. Think of a parent who stays home to take care of children or someone who helps out with family tasks. These activities are crucial for the household’s functioning, but they don’t count as formal employment because they don’t generate income. Non-employment highlights the important work done in homes that isn’t always recognized in economic measures.
VSAQ-7: Poverty Line
The Poverty Line is like a financial boundary that helps us understand who is considered poor. It’s the minimum income level needed to afford basic necessities like food, shelter, clothing, and healthcare. If someone’s income falls below this line, they are considered to be living in poverty. The poverty line varies depending on the cost of living in different regions or countries. For instance, in an expensive city, the poverty line might be higher because it costs more to meet basic needs. Identifying who falls below the poverty line helps governments and organizations target their efforts to help those in need.
VSAQ-8 : Poverty Gap.
The poverty gap is a measurement used to assess the extent of poverty within a population by calculating the average income shortfall of individuals or households below the poverty line. It quantifies how far, on average, the income or consumption expenditure of the poor falls below the established poverty line. The poverty gap index is expressed as a proportion of the poverty line itself. This index helps policymakers and researchers understand the depth of poverty experienced by those living below the poverty line. A higher poverty gap indicates a more significant income deficit among the poor, highlighting the severity of poverty in a given area or population.
VSAQ-9 : Multidimensional poverty Index.
The Multidimensional Poverty Index (MPI) is an advanced poverty measurement introduced in 2010, designed to provide a holistic view of poverty by considering various dimensions of well-being. This index goes beyond just income and incorporates factors like health, education, and living standards. To calculate the MPI, the percentage of people living in poverty is multiplied by the average number of dimensions in which they experience deprivation. This comprehensive approach allows policymakers and researchers to gain a more thorough understanding of poverty, enabling them to develop targeted interventions and policies to alleviate multiple aspects of deprivation simultaneously.