If total output rises but environmental damage also rises, which limitation of a macroeconomic measure is shown?
Answer and explanation
Correct answer: Total output does not fully show every aspect of welfare
GDP and related output measures record market production, but they do not fully capture environmental degradation, unpaid work, inequality, leisure, or the quality of life. Production may rise while pollution and resource depletion reduce welfare. Therefore macroeconomic aggregates are useful indicators of activity, but they should be supplemented with environmental and social measures.
Frequently asked questions
What is the correct answer to this question?
Total output does not fully show every aspect of welfare
Why is this the correct answer?
GDP and related output measures record market production, but they do not fully capture environmental degradation, unpaid work, inequality, leisure, or the quality of life. Production may rise while pollution and resource depletion reduce welfare. Therefore macroeconomic aggregates are useful indicators of activity, but they should be supplemented with environmental and social measures.
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.
