Page 53 - Understanding Economics for Class 10

1. Assertion (A): Intermediate goods are sold by one producer to another either for further
processing or for resale.
Reason (R): All intermediate goods after processing becomes final goods.
Ans. (b) Both A and R are true but R is not the correct explanation of A.
Goyal Brothers Prakashan
2. Assertion (A): The value of intermediate goods are not included while calculating national
income.
Reason (R): The value of final goods already includes the value of intermediate goods.
Ans. (a) Both A and R are true and R is the correct explanation of A.

iii. case Study Based Questions
Read the extract given below and answer the questions that follows:
1. Gross Domestic Product (GDP) and Per Capita Income: India's GDP was USD 2.7 trillion
in 2020, making it the world's sixth-largest economy. However, the per capita income in
India is only about USD 1,947 per year, which is much lower than the world average of
USD 11,570. This means that the overall economic output in India is high, but the benefits
are not evenly distributed among the population.
Human Development Index (HDI): HDI is a composite index that measures the overall
development of a country based on indicators such as life expectancy, education, and income.
According to the United Nations Development Program (UNDP), India's HDI value in 2020
was 0.645, which is below the world average of 0.737.
This indicates that while India has made significant progress in improving human development
indicators in recent years, there is still a long way to go.
(i) Why is India’s Per capita income low compared to the world average? Suggest any
one measure to increase the Per capita income of India.
Ans. Rapid population growth directly affects per capita income in an economy. Rapid
growth leads to the problem of allocation of scarce resources. The lack of education,
healthcare, and employment opportunities lowers the income level of the citizens,
which results in the low per capita income of the country.
(ii) Mention any one measure to increase the Per capita income of India.
Ans. The per capita income of India may increase through government’s investment in
infrastructure, Education and training. Greater education and job skills allow individuals
to produce more goods and services, start businesses, and earn higher incomes
(iii) Propose any two measures to be taken by India in improving its HDI.
Ans. Two measures to be taken by India to improve its HDI could be:
(a) Increase in budgetary allocation on education and healthcare facilities: This could
involve building more hospitals and clinics, training more healthcare workers, and
implementing policies to reduce the cost of healthcare. Subsidies can be channelized
towards generation of more employment opportunities.
(b) Investing in education: This could involve increasing the number of schools and
colleges, providing better teacher training, and implementing policies to ensure
that all children have access to education. So that students are gaining the skills
they need to succeed in the workforce.

2. The tertiary sector has emerged as the largest producing sector in India replacing the
primary sector. There could be several reasons. First, in any country several services such
as hospitals, educational institutions, post and telegraph services, police stations, courts,
village administrative offices, municipal corporations, defence, transport, banks, insurance
companies, etc. are required. These can be considered as basic services. In a developing
Economics Class X E-47