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Which expenditure may be called defensive expenditure?

Answer and explanation

Correct answer: Spending to clean damage caused by pollution

Defensive expenditure is spending undertaken to protect people from, or repair the harm caused by, undesirable conditions such as pollution. Money spent cleaning pollution damage may increase measured GDP because the cleanup service is counted, even though it restores welfare lost through environmental harm. Therefore, option D is correct. Schools, libraries and clean-water projects are generally developmental or welfare-enhancing investments rather than defensive responses to prior damage.

Related tags

Defensive ExpenditurePollution CleanupGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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