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If a country's total dependency ratio is declining but pension pressure is increasing, which explanation is possible?

Answer and explanation

Correct answer: Child dependency is falling rapidly while elderly dependency is rising slowly

The total dependency ratio can improve even while pension pressure becomes stronger, because the two types of dependency may move in opposite directions. A large fall in child dependency can reduce the combined ratio, while a smaller rise in elderly dependency can still increase the number of pension beneficiaries and the financial burden on pension systems.

In the stated case, child dependency falls rapidly and elderly dependency rises slowly. The fall is larger than the rise, so total dependency declines overall. However, the growing elderly component creates greater pension needs. Therefore, option A is possible and best explains both observations. A falling elderly population would not explain rising pension pressure, and the other options are inconsistent.

Related tags

Total DependencyPension PressureChild DependencyElderly DependencyAge StructurePopulation CompositionGeographyClass 12 Mcq

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