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If traffic congestion raises fuel consumption and vehicle repair spending what outcome is possible?

Answer and explanation

Correct answer: GDP may rise while welfare falls due to time and environmental losses

Additional fuel purchases and vehicle repairs involve market transactions and can increase measured expenditure and GDP, particularly when they represent final services or replacement activity. Congestion simultaneously imposes lost working or leisure time, stress, pollution, and extra vehicle wear. These costs may reduce welfare even as recorded spending rises. Therefore option B is correct; the other choices are either absolute, incorrect, or misuse the idea of intermediate goods.

Related tags

GdpWelfareTraffic-CongestionFuelExternalityGdp And WelfareNational Income And Related AggregatesEconomics

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