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Ignoring environmental damage in GDP creates which problem?

Answer and explanation

Correct answer: GDP may overstate actual economic welfare

GDP records the market value of production but does not fully subtract pollution, resource depletion, health damage, or loss of environmental quality. Consequently, production may rise while people's actual well-being declines. If environmental costs are ignored, GDP can overstate economic welfare. Measures such as green GDP attempt to adjust production for environmental degradation, so option A is correct.

Related tags

Gdp And WelfareEnvironmental DamageGreen GdpPollutionNational Income And Related AggregatesEconomicsClass 11 Mcq

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