If traffic congestion raises fuel consumption and vehicle repair spending what outcome is possible?
Answer and explanation
Correct answer: GDP may rise while welfare falls due to time and environmental losses
Additional fuel purchases and vehicle repairs involve market transactions and can increase measured expenditure and GDP, particularly when they represent final services or replacement activity. Congestion simultaneously imposes lost working or leisure time, stress, pollution, and extra vehicle wear. These costs may reduce welfare even as recorded spending rises. Therefore option B is correct; the other choices are either absolute, incorrect, or misuse the idea of intermediate goods.
Frequently asked questions
What is the correct answer to this question?
GDP may rise while welfare falls due to time and environmental losses
Why is this the correct answer?
Additional fuel purchases and vehicle repairs involve market transactions and can increase measured expenditure and GDP, particularly when they represent final services or replacement activity. Congestion simultaneously imposes lost working or leisure time, stress, pollution, and extra vehicle wear. These costs may reduce welfare even as recorded spending rises. Therefore option B is correct; the other choices are either absolute, incorrect, or misuse the idea of intermediate goods.
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.
