Which is an example of welfare falling while GDP rises?
Answer and explanation
Correct answer: Increased output of smoke-emitting factories
GDP can rise when smoke-emitting factories increase their market production, because the goods sold add to measured output. Yet the accompanying pollution can damage health, reduce environmental quality and impose costs on people, causing welfare to fall. Therefore, option A is correct. Clean water, better schools and expanded vaccination generally improve welfare, so they are not the intended example of welfare declining.
Frequently asked questions
What is the correct answer to this question?
Increased output of smoke-emitting factories
Why is this the correct answer?
GDP can rise when smoke-emitting factories increase their market production, because the goods sold add to measured output. Yet the accompanying pollution can damage health, reduce environmental quality and impose costs on people, causing welfare to fall. Therefore, option A is correct. Clean water, better schools and expanded vaccination generally improve welfare, so they are not the intended example of welfare declining.
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.
