If a country's real GDP remains constant but pollution falls greatly what may happen to welfare?
Answer and explanation
Correct answer: Welfare may rise
The governing concept is that GDP is an incomplete indicator of welfare because it does not fully value environmental quality. If real GDP is unchanged but pollution falls, people may experience fewer respiratory illnesses, lower health costs and a cleaner environment. These benefits can increase welfare even without additional recorded production. Option B is too certain, while C and D do not follow from a fall in pollution.
Frequently asked questions
What is the correct answer to this question?
Welfare may rise
Why is this the correct answer?
The governing concept is that GDP is an incomplete indicator of welfare because it does not fully value environmental quality. If real GDP is unchanged but pollution falls, people may experience fewer respiratory illnesses, lower health costs and a cleaner environment. These benefits can increase welfare even without additional recorded production. Option B is too certain, while C and D do not follow from a fall in pollution.
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.
