A country's GDP grows rapidly, but the growth is based on excessive exploitation of limited natural resources. What is the concern for long-term welfare?
Answer and explanation
Correct answer: Depletion of natural capital may reduce future production and welfare capacity
Sustainable welfare requires maintaining the productive and ecological assets on which future generations depend. Rapid extraction can increase current GDP, but depletion of forests, minerals, soil, or water may reduce future production capacity and quality of life. Option B states this intertemporal trade-off. A and D deny resource dependence, while C is too narrow because depletion can affect real as well as nominal outcomes.
Frequently asked questions
What is the correct answer to this question?
Depletion of natural capital may reduce future production and welfare capacity
Why is this the correct answer?
Sustainable welfare requires maintaining the productive and ecological assets on which future generations depend. Rapid extraction can increase current GDP, but depletion of forests, minerals, soil, or water may reduce future production capacity and quality of life. Option B states this intertemporal trade-off. A and D deny resource dependence, while C is too narrow because depletion can affect real as well as nominal outcomes.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
