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What would be useful to deduct from GDP while measuring net economic welfare?

Answer and explanation

Correct answer: Costs of pollution and congestion

GDP records market production, but production and consumption can impose external costs on society. Pollution damages health and ecosystems, while congestion wastes time, fuel, and productivity. If the aim is net economic welfare, such negative effects should be deducted from the measured benefit of output, whereas education, health improvements, and leisure are positive welfare components that should not be treated as deductions. Hence option B is correct.

Related tags

Net Economic WelfarePollutionCongestionSocial CostGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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