If national output rises but environmental damage also rises, which limitation of a macroeconomic measure is shown?
Answer and explanation
Correct answer: Total output does not show all aspects of welfare.
GDP and national output record market production, but they do not automatically subtract pollution, resource depletion, or loss of ecological quality. Production may rise while health and living conditions deteriorate. Hence output is an important activity measure, not a complete measure of welfare or sustainable progress.
Frequently asked questions
What is the correct answer to this question?
Total output does not show all aspects of welfare.
Why is this the correct answer?
GDP and national output record market production, but they do not automatically subtract pollution, resource depletion, or loss of ecological quality. Production may rise while health and living conditions deteriorate. Hence output is an important activity measure, not a complete measure of welfare or sustainable progress.
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.
