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    Question

    What can be the major causes of the problem of poverty

    in any economy? 1.Lower capital formation 2.Lack of holding structures 3.Lack of demand 4.Large population Select the correct answer using the code given below:
    A 1, 2 and 3 only Correct Answer Incorrect Answer
    B 2, 3 and 4 only Correct Answer Incorrect Answer
    C 3 and 4 only Correct Answer Incorrect Answer
    D 1, 2, 3 and 4 Correct Answer Incorrect Answer

    Solution

    (Explanation): Poverty in any economy is caused by multiple factors, which can be categorized into individual circumstances and economy-wide structural issues .  1.Lower Capital Formation – Lack of investment in infrastructure, technology, and industries leads to low productivity and economic stagnation, contributing to poverty. 2.Lack of Holding Structures – Weak property rights, lack of financial inclusion, and ineffective land ownership structures can prevent wealth accumulation and economic growth. 3.Lack of Demand – When aggregate demand in the economy is low due to unemployment or income inequality, businesses struggle, leading to further job losses and poverty. 4.Large Population – High population growth without proportional economic growth increases dependency, lowers per capita income, and leads to unemployment and poverty.

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