B.Com Ist Year International Monetary Fund Short Question Answer Notes

Q. 26. Give four effects of unfavourale balance of trade.

Ans. infavourable balance of trade create obstacles in the path of economic development.

(ii) Due to unfavourable balance of trade, value of home currency will decline and affects the economy of a country badly.

(ii) It creates reduction in foreign exchange reserve.

(iv) This increase the debt burden of a country.

Q.27. ‘Balance of payment must always balance’. Explain.

Ans. Balance of payment is prepared in the terms of debits and credits based on a system of double entry book-keeping. In this system, each transaction has two aspects : debits and credits, which are equal in amount but appear on the opposite sides of the balance of payment account. If all the entries are made correctly, then total debits must equal total credit. Thus, in the accounting sense, balance of payment of a country must always balance.

Q.28. Give any four causes of disequilibrium in the balance of payment.

Ans. Disequilibrium in the balance of payment arises due to following causes:

• Due to excess payments for imports.
• Increase in the consumption and prices of crude oil.

(iii) Payments of interest on foreign debts.

(iv) Less growth in exports.

Q.29. Define deficit balance of payment. (Meerut, 2014)

Ans. Balance of payments is unfavourable when its payments are more than its receipts. This situation reduces foreign exchange reserves. In this case exports of goods, services and capital receipts are less than import of goods, services and capital payments. It is also termed as deficit balance of payments.

Q.30. Give suggestions to correct disequilibrium in balance of payments.

Ans. The following measures are suggested to correct disequilibrium in balance of payments:

• Promotion ofexports and restriction on non-essential imports.
• Encouragement to foreign investments.
• Strengthening the special Economic Zones to boost exports.
• Devaluation of Indian currency.

Q.31 What is meant by import substitution?

Ans. Import substitution means to replace the imported ity or commodities by indigenous production. In other

words, it means to produce at home what we are importing from abroad, so that the imports of such commodities are done away with To achieve the objective of self-reliance and to save the foreig exchange, import substitution is necessary for a country,

Q.32. Write in brief the features of unemployment in India.

Ans. Main features/trends of unemployment in India are as follows:

(i) Despite fairly healthy GDP growth, unemployment rate

has increased from 7.3% in 1999-2000 to 8.1% in 2007-08

leading to frustration among the educated youth.

(ii) Unemployment among feamles is higher in urban areas.

• Unemployment rates for women are higher than the unemployment rates for men.

(iv) Unemployment rates are higher for educated-segments and less for illiterate segments.

(v) There are wide inter-state fluctuations in the

unemployment rates.

(vi) More persons are employed in unorganised sector as

compared to organised sector.

Q.33. Write main causes of rural unemployment in India. (Meerut, 2014)

Ans. Main causes of rural unemployment in India are as follows:

(i) Declining of cottage and rural industries.

(ii) Agricultural backwardness.

(iii) Immobility oflabour.

(iv) Joint family system is the main cause of disguised unemployment in rural areas.

(v) Lack of national employment policy.

Q.34. Write short note on “relationship between poverty and unemployment”. (Meerut, 2013)

Ans. Unemployment is the main cause of poverty. In a state of unemployment, a man is deprived of all sources of income. People are unable to fulfil their basic needs. This lowers their standard of living and efficiency. As a result, it becomes difficult to increase production and to get rid of poverty in future. In this way, poverty and unemployment become interdependent.

Q.34 A.What is meant by Cyclical Unemployment?

Ans. In every economy, trade cycles prevail i.e., period of boom and depression. In the period of boom, there are more economic activities. More persons get job in the period of boom. While in the period of depression, there are lesser economic activities like decrease in demand, curtailing production activities, closure of some industries, etc. All this renders many persons unemployed. So, the increased unemployment caused due to cyclical movements is called cyclical unemployment.

Q.34 B.What is meant by Urban Unemployment?

Ans. Urban Unemployment : In urban areas, rate of unemployment is higher among the educated people in comparison to uneducated people. In urban areas, the problem of open-unemployment also prevails. Similarly, because of increasing urbanisation the pressure on industries has increased. This has created the problem of industrial unemployment. Thus, urban unemployment is characterized by educated unemployment, open-unemployment and industrial unemployment.

Q.34C.What is meant by Rural Unemployment?

Ans. Rural Unemployment : In rural areas, increasing population creates more pressure on agriculture. This has led to the problem of unutilized labour in the form of disguised unemployment in agriculture sector. Because of seasonal nature of cropping, the problem of seasonal unemployment prevails in rural areas. Similarly, the problem of under-employment also prevails in rural areas, where farmers get some kind of work in some months, but for rest of the months, they remain unemployed. Thus, rural unemployment is characterised by disguised-unemployment, Seasonal unemployment and under-employment.

Q.35 Discuss the main causes of Educated Unemployment.

Ans: Main causes of educated unemployment are : defective wacation system, slow growth of professional education, wrong ude of educated peoples and lack of employment guidelines.

Q.36. Write the main plâns launched by the government for Employment Generation.

Ans. The government for India has launched many plans for employment generation such as: Swarna Jayanti, Sahkari Rozgar Yojna, Prime Minister’s Rozgar Yojna, Nehru Rojgar Yojna etc. For detail Discussion See Page No.54 and 55.

37. What is meant by Disguised Unemployment?

Ans. This type of unemployment is seen in the agriculture sec tor. In the agriculture sector. In the rural areas more than a fourth of the working population is not being productively employed. There are more than required ble engaged in agriculture. If some of them are transferred to ner occupation, even then there will be no effect on agricultural production. Such excess engagement of labour on agriculture is called disguised unemployment. This is because, it seems that all are employed but in reality, some persons are unemployed.

It is also known as hidden unemployment or under employment. In under employment situation, a person does not set full employment according to his/her capability, and qualifications. In such a case, the workers, of course, contribute to the production but not so much which they could have done.

Q.38. Discuss the effects of unemployment.

Ans. See page No. 56.

Q.99. What is meant by Absolute poverty ?

Ans. From the absolute angle of view, poverty refers to the state in which people’s standard of living is so low, that they cannot satisfy their minimum needs. Minimum needs means that minimum level of consumption which is essential for more subsistence. He is not able to maintain his health and in fact he may bestarving.

Q.40. What is meant by Relative Poverty?

Ans. Relative poverty can be found by comparing between the standards of living of different countries or classes, which countries or classes have lower standard of living, we can call them poorer than other countries.

Q.41. What is meant by Poverty Line?

Ans. Planning Commission of India, has fixed the minimum standard of nutrition, 2400 calories per day in the rural areas and 2100 calories everyday for the urban areas. Person consuming lesser quantity of nutrients, then this will be termed as living below poverty line. Poors of India are recognised on the basis of this poverty line.

Q.42. Explain the poverty in India. (Meerut, 2013)

Ans. In India, percentage of population living below the poverty line has come down but still about 21.8% of our population is living below the poverty line. In urban-rural comparison it was found that percentage of poor is more in rural areas as compared to

urban areas. In different rentage of population living below poverty line. In Odisha, Jharkhand and Bihar, percentage of poor population is much higher as compared to national average. Poverty is the major economic problem of India and the main cause of poverty in India is its large size of population. overty is the major economic

Q.43. Write main causes of poverty in India.

Ans. Main causes of poverty in India are as follows:

(i) Rapid increase in population adversely affects the grow

of per capita income.

(ii) Growth rate of national income and economic development

is slow which keeps the country poor.

(iii) Inequality in assets and income distribution. (iv) Under utilisation of natural resources means less econom activities, which leads to poverty.

B.Com Ist Year International Monetary Fund Short Question Answer Notes

Q.44. Suggest measures to alleviate poverty in India.

Ans. See Page No. 60.

Q.45. What is meant by regional imbalance ?

Ans. All over the world, the level of economic development varies from state to state and region to region. When there exists wide differences in the per capita income of various states, it is called as imbalanced regional development. But according to some economists, an area should be considered backward or imbalanced developed only when potentials of the region have not been fully exploited. But in the ultimate analysis, the growth is measured in terms of relative income in various states. If there are wide differences in level of income among various states, it is regional imbalance which is the case in India. Some of states of the country are very developed while many others are in very backward condition.

Q.46. Write a short note on social injustice in India. (Meerut, 2013)

Ans. Social injustice means inequality in the distribution of income, wealth, regional inequality, lack of employment opportunities, education, health, water supply facilities and Injustice towards women, children, socially deprived sections of society, disabled persons, aged persons, orphaned and abandoned children in the society.

In India, economic growth failed to raise the share of income of de poorest segment of the population, it failed to raise the level of

employment in the country and it also failed in raising availability of social services like education, health, family welfa water supply, sanitation, labour welfare and welfare of SC/ST backward classes of our society. The present structure development resulted in social problems like child labour, iniust: towards women, malnutrition, unfavourable sex ratio, urban-run gaps etc. Thus, our growth strategy has failed to solve some basic problems of society.

Q.47. Discuss in brief main elements of social injustice.

Ans. Three main elements of social injustice are as follows:

(1) Inequality: It refers to unequal distribution of resources in the country. Inequality can be with regard to income, wealth, urban and rural inequality and regional inequality.

(2) Insufficient Social Services : Today our country is producing various items like car, airconditioners, aircrafts, ships but we are lagging far behind in the availability of social services,

(3) Socially Disadvantaged Groups in Society : In our society we have various sections who have remained deprived of benefits of economic development.

Q. 48. What is meant by Inflation ? (Meerut, 2012)

Ans. When demand of goods and services exceeds their supplies and it cannot be satisfied even by imports, it leads to rise in prices. The rise of prices of goods and services in economic term is known as inflation. In other words, inflation is a stage which pushes up the price level and pushes down the value of money. For Example, before independence one kg. pure ghee can be bought for Rs. one while in present days price of one kg. pure ghee is Rs. 420. This is the situation of inflation as prices of ghee is increased and value of money is decreased.