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If domestic output rises along with faster depletion of forests, which limitation of GDP is revealed?

Answer and explanation

Correct answer: Failure to fully show depletion of natural resources

GDP records the market value of current production, but it does not fully subtract the loss of natural capital such as forests, minerals, or biodiversity. Therefore, output may increase while environmental assets are being depleted, creating an incomplete picture of sustainable economic welfare. This limitation motivates measures such as green GDP, which attempt to account for environmental damage and resource depletion.

Related tags

Gdp And WelfareEnvironmental DepletionGreen GdpNatural ResourcesSustainable DevelopmentNational Income And Related AggregatesEconomicsClass 11 Mcq

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