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If a country's real GDP remains constant but pollution falls greatly what may happen to welfare?

Answer and explanation

Correct answer: Welfare may rise

The governing concept is that GDP is an incomplete indicator of welfare because it does not fully value environmental quality. If real GDP is unchanged but pollution falls, people may experience fewer respiratory illnesses, lower health costs and a cleaner environment. These benefits can increase welfare even without additional recorded production. Option B is too certain, while C and D do not follow from a fall in pollution.

Related tags

Constant GdpPollution ReductionEnvironmental WelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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