Which adjustment can bring conventional GDP closer to environmental welfare?
Answer and explanation
Correct answer: Deducting natural resource depletion and pollution costs
The governing concept is green accounting: conventional GDP can rise when production creates pollution or depletes forests, minerals, and other natural capital, even though sustainable welfare may decline. Deducting estimated environmental damage and resource depletion gives a measure closer to net green output, so option A is correct. Double-counting taxes, mishandling imports, or adding used-goods sales would not correct this environmental omission.
Frequently asked questions
What is the correct answer to this question?
Deducting natural resource depletion and pollution costs
Why is this the correct answer?
The governing concept is green accounting: conventional GDP can rise when production creates pollution or depletes forests, minerals, and other natural capital, even though sustainable welfare may decline. Deducting estimated environmental damage and resource depletion gives a measure closer to net green output, so option A is correct. Double-counting taxes, mishandling imports, or adding used-goods sales would not correct this environmental omission.
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.
