I follow 2 below advise from Gmatninja on this issue :
1. Subject of the 2nd independence clause (if a pronoun) should refer back to the subject of the first I.C. - our first consideration
2. The pronoun should refer to any referents, only one of which should makes sense. You don't want to overreact to that, though. Don't eliminate it immediately, just on that basis alone. But if you have a better option that removes the pronoun ambiguity -- and that doesn't have more serious problems -- go ahead and select the option that removes the ambiguity only if you have other better options.

1. rule-refer to systematic clearing of forests
2. rule- How can furniture deforested whole regions? How can farmland by itself deforested whole regions? - again with this rule, it makes sense with systematic clearing of forests .


In short,
1. pronoun is ambiguous when multiple nouns refer to single pronoun
2. Is there any better option without ambiguity.( Just by removing pronoun doesn't solve the problem. You can not risk structure , meaning and other critical factors for sake of pronoun ambiguity)

As by GmatNinja: Pronoun Ambiguity is admittedly a little bit of a grey area on the GMAT. The GMAT definitely tests pronoun ambiguity, but it isn't an absolute rule that you must need to get rid of pronoun always.

Hi ravigupta2912, in case of pronoun ambiguity, application of following rule often comes in handy:

Pronoun-subject in one clause can be presumed to refer to noun-subject of another clause.

The two clauses here are:
i) The systematic clearing of forests in the United States created farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture - The systematic clearing of forests is the noun-subject
ii) it also caused erosion and very quickly deforested whole regions - it is the pronoun-subject

So, it refers to The systematic clearing of forests.

Having said that, it's worth noting that pronoun ambiguity should not be the only reason to eliminate an answer choice.

p.s. Our book EducationAisle Sentence Correction Nirvana discusses Pronoun ambiguity, its application and examples in significant detail. If you or someone is interested, PM me your email-id; I can mail the corresponding section.
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but what if the sentence is like - She likes not only shaggy puppies, but she also likes short-haired ones

In which context do you ask this question arya251294?

At the very least, I would say that there is a bit of a redundancy issue here, since a more concise construct would be:

She likes not only shaggy puppies but also short-haired ones.
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Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also caused erosion and very quickly deforested whole regions.


(A) Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also

"did" and "gave" are not parallel to each other. "I did the assignment and gave her candy" is not parallel

(B) Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast), which gave consumers relatively inexpensive houses and furniture, but also

"Not only did the systematic clearing of forests in the United States create farmland (especially in the Northeast), giving consumers relatively inexpensive..." sounds much better

(C) The systematic clearing of forests in the United States, creating farmland (especially in the Northeast) and giving consumers relatively inexpensive houses and furniture, but also

it is choppy. What did the "The systematic clearing of forests in the United States" do? Where is the connector between the clearing of the forests and the creating of farmlands?

(D) The systematic clearing of forests in the United States created farmland (especially in the Northeast) and gave consumers relatively inexpensive houses and furniture, but it also

Clear and parallel. Not wordy. The clearing of forests created X and gave customers Y and Z, but it also ...
NOTE: we can use "but it also" without having "not only"... but we cannot have "not only" without "but it also".

(E) The systematic clearing of forests in the United States not only created farmland (especially in the Northeast), giving consumers relatively inexpensive houses and furniture, but it

If you are going to use "not only" you also have to say "but * also"/"but also". Here we used "not only" but NOT "but it also"
* = wildcard

How would you even understand or know the intended meaning.

One can always think, creating farmland gave x cheap furniture. Because there's more supply of wood now?

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