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If pollution reduces people’s ability to work and increases medical spending, what may happen to net welfare?

Answer and explanation

Correct answer: Net welfare may fall even though medical spending is counted in GDP

GDP includes market-provided medical services, so spending on treatment can raise measured output. But such spending may be needed to address harm caused by pollution, which can also reduce health and work capacity. Net welfare may therefore fall even if GDP rises. C is correct.

Related tags

PollutionGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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