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Which of the following is a limitation of GDP as a measure of welfare?

Answer and explanation

Correct answer: It does not adequately deduct environmental damage

GDP adds the market value of final goods and services produced within domestic territory, but it generally does not subtract all costs imposed by pollution, resource depletion, or ecological damage. Production can therefore increase measured GDP while reducing health and environmental quality. Option C identifies this welfare limitation. Options A, B, and D describe features of GDP accounting rather than the specific failure to reflect environmental costs.

Related tags

Environmental DamageGdp LimitationWelfare MeasureGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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