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Environmental quality may decline even when real GDP rises. What does this show?

Answer and explanation

Correct answer: Real GDP is not a complete measure of welfare

Real GDP measures the market value of final goods and services produced, adjusted for price changes. It does not fully include pollution, resource depletion, leisure, inequality or other non-market aspects of well-being. Thus, production can rise while environmental costs increase. Option A is correct; this limitation does not make real GDP useless or always incorrect.

Related tags

EnvironmentWelfareReal Gdp LimitationEconomic GrowthGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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