When pollution cleanup expenditure rises in GDP, what should be kept in mind in welfare analysis?

Correct answer: Expenditure may raise GDP but pollution damage may reduce welfare

Expenditure on pollution-control or cleanup services may involve current production, so it can increase measured GDP. However, GDP may not subtract the full health, environmental, and quality-of-life damage caused by the pollution itself. Thus, higher GDP from cleanup activity does not automatically mean higher welfare. Environmental costs must be considered separately when evaluating social well-being.