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      Question

      Economy A shows improved literacy, higher life

      expectancy, and better school enrolment. Economy B shows high per capita income but also high inequality and poor health outcomes. Which development indicator captures BOTH human capability AND inequality-adjustment?
      A Human Development Index (HDI) β€” averages health, education, and income into a composite score Correct Answer Incorrect Answer
      B Gender Inequality Index (GII) β€” measures gender-based disparities in reproductive health, empowerment, and labour market participation Correct Answer Incorrect Answer
      C Inequality-adjusted Human Development Index (IHDI) β€” discounts HDI for inequality in each dimension, better reflecting actual human development under distributional inequality Correct Answer Incorrect Answer
      D Multidimensional Poverty Index (MPI) β€” captures simultaneous deprivations in health, education, and living standards Correct Answer Incorrect Answer

      Solution

      Formula: IHDI = HDI Γ— (1 βˆ’ inequality loss). IHDI < HDI always; the gap quantifies the β€œloss” due to inequality. Economy B with high income but high inequality would score much lower on IHDI than HDI.

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