Which limitation is shown when environmental degradation is ignored in NNP?
Answer and explanation
Correct answer: NNP may overstate welfare and sustainability
NNP records marketed production in monetary terms, but environmental damage such as polluted air, water contamination, biodiversity loss, and depletion of natural resources may not be fully deducted from it. Consequently, measured NNP can rise even while health, living conditions, and future productive capacity deteriorate. Therefore, NNP alone may overstate welfare and sustainability, so option A is correct.
Frequently asked questions
What is the correct answer to this question?
NNP may overstate welfare and sustainability
Why is this the correct answer?
NNP records marketed production in monetary terms, but environmental damage such as polluted air, water contamination, biodiversity loss, and depletion of natural resources may not be fully deducted from it. Consequently, measured NNP can rise even while health, living conditions, and future productive capacity deteriorate. Therefore, NNP alone may overstate welfare and sustainability, so option A is correct.
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.
