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Excessive groundwater extraction raises current production but reduces future water availability. Which limitation of GDP does this illustrate?

Answer and explanation

Correct answer: It does not adequately reflect natural-resource depletion and sustainability

GDP records the value of current market production, but conventional GDP does not fully subtract the depletion of natural capital, such as groundwater, or the future cost of environmental damage. Therefore, production can rise while long-term welfare and sustainability decline. Option C is correct; the other options describe inflation, population measurement, or government services, none of which explains this resource-depletion problem.

Related tags

Natural ResourcesSustainabilityGdp LimitationsGreen GdpGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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