Which option is the correct criticism regarding GDP and the environment?
Answer and explanation
Correct answer: GDP does not fully reflect the depletion of natural resources
GDP records the market value of current production, but it does not automatically deduct the loss of forests, minerals, biodiversity, or environmental quality caused by production. Consequently, GDP may rise even while natural capital is being depleted and pollution is increasing. It is therefore not a complete measure of sustainable economic welfare.
Frequently asked questions
What is the correct answer to this question?
GDP does not fully reflect the depletion of natural resources
Why is this the correct answer?
GDP records the market value of current production, but it does not automatically deduct the loss of forests, minerals, biodiversity, or environmental quality caused by production. Consequently, GDP may rise even while natural capital is being depleted and pollution is increasing. It is therefore not a complete measure of sustainable economic welfare.
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.
