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If improved public transport reduces private vehicle fuel sales, what is possible?

Answer and explanation

Correct answer: Some GDP sales may fall while welfare rises through time savings and lower pollution

GDP counts market transactions, not every improvement in quality of life. Better public transport may reduce fuel purchases and some related sales, but it can save commuting time, lower congestion and reduce pollution. These benefits may raise welfare even if a particular component of measured GDP falls. Option B captures both effects; A assumes welfare follows one sale, while C and D are factually incorrect.

Related tags

Public TransportExternal BenefitsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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