What problem arises because GDP does not fully show environmental damage?
Answer and explanation
Correct answer: Welfare may fall even when GDP rises
Production may increase GDP while factories, traffic, or resource extraction create pollution, health risks, and ecological loss. GDP records the value of marketed output but does not fully deduct these environmental costs. Consequently, measured GDP can rise even when people’s overall welfare declines.
Frequently asked questions
What is the correct answer to this question?
Welfare may fall even when GDP rises
Why is this the correct answer?
Production may increase GDP while factories, traffic, or resource extraction create pollution, health risks, and ecological loss. GDP records the value of marketed output but does not fully deduct these environmental costs. Consequently, measured GDP can rise even when people’s overall welfare declines.
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.
