If spending rises on both polluting production and pollution cleanup what may GDP show?

Correct answer: GDP may rise from both activities while net welfare remains doubtful

The governing concept is the limitation of GDP as a welfare measure and the treatment of defensive expenditure. Polluting production can add to measured market output, while paid cleanup services can also add to GDP because they are newly produced services. However, cleanup may merely repair damage caused by pollution rather than create a comparable improvement in welfare. Thus GDP may rise from both activities even while net welfare remains doubtful. Cleanup is not automatically excluded, and pollution does not always improve welfare.