Which change can reduce current welfare without lowering GDP?
Answer and explanation
Correct answer: A decline in clean-air quality
GDP is a measure of marketed production, not a complete measure of environmental well-being. If air quality deteriorates without a corresponding market transaction, the loss may not be deducted from measured GDP. People can therefore suffer poorer health and quality of life while recorded output stays unchanged. Hence option A is correct; productivity and public-health improvements generally support welfare, while price stability is not itself this environmental loss.
Frequently asked questions
What is the correct answer to this question?
A decline in clean-air quality
Why is this the correct answer?
GDP is a measure of marketed production, not a complete measure of environmental well-being. If air quality deteriorates without a corresponding market transaction, the loss may not be deducted from measured GDP. People can therefore suffer poorer health and quality of life while recorded output stays unchanged. Hence option A is correct; productivity and public-health improvements generally support welfare, while price stability is not itself this environmental loss.
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.
