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What problem arises regarding environmental damage in GDP?

Answer and explanation

Correct answer: Its full value is generally not deducted

GDP records the value of market production, but it generally does not subtract the complete social cost of pollution, congestion, ecological damage, or depletion of natural resources. Production may therefore raise GDP while simultaneously harming health and the environment. Option D is correct because the unrecorded or incompletely measured environmental cost creates a major limitation when GDP is used as a welfare measure.

Related tags

Environmental DamageNatural ResourcesGdp LimitationWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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