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Which limitation is shown when environmental degradation is ignored in NNP?

Answer and explanation

Correct answer: NNP may overstate welfare and sustainability

NNP records marketed production in monetary terms, but environmental damage such as polluted air, water contamination, biodiversity loss, and depletion of natural resources may not be fully deducted from it. Consequently, measured NNP can rise even while health, living conditions, and future productive capacity deteriorate. Therefore, NNP alone may overstate welfare and sustainability, so option A is correct.

Related tags

EconomicsNnpWelfareEnvironmentSustainabilityLimitationsGdp And WelfareNational Income And Related Aggregates

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