What problem arises regarding environmental damage in GDP?
Answer and explanation
Correct answer: Its full value is generally not deducted
GDP records the value of market production, but it generally does not subtract the complete social cost of pollution, congestion, ecological damage, or depletion of natural resources. Production may therefore raise GDP while simultaneously harming health and the environment. Option D is correct because the unrecorded or incompletely measured environmental cost creates a major limitation when GDP is used as a welfare measure.
Frequently asked questions
What is the correct answer to this question?
Its full value is generally not deducted
Why is this the correct answer?
GDP records the value of market production, but it generally does not subtract the complete social cost of pollution, congestion, ecological damage, or depletion of natural resources. Production may therefore raise GDP while simultaneously harming health and the environment. Option D is correct because the unrecorded or incompletely measured environmental cost creates a major limitation when GDP is used as a welfare measure.
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.
