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If traffic congestion increases fuel use and vehicle repairs what may GDP show?

Answer and explanation

Correct answer: Market spending may rise while time and environmental welfare decline

The governing concept is that GDP measures market production and expenditure, not every cost or benefit affecting welfare. Congestion can increase sales of fuel and repair services, which may raise recorded GDP. At the same time, commuters lose time and pollution may worsen, reducing social and environmental welfare. Therefore option C is correct; the other options either overstate or misunderstand GDP accounting.

Related tags

Traffic CongestionFuel UseRepair SpendingWelfareGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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