Why is it difficult to assess environmental conditions accurately from GDP?
Answer and explanation
Correct answer: The full value of environmental damage is not recorded in it
GDP records the market value of current production, but it does not fully subtract pollution, loss of biodiversity, or depletion of natural resources. Production can therefore increase while environmental quality and long-term welfare decline. Option D is correct because the unpriced or incompletely priced damage is missing from the headline GDP figure. The other options wrongly deny environmental importance or make an absolute claim about resources.
Frequently asked questions
What is the correct answer to this question?
The full value of environmental damage is not recorded in it
Why is this the correct answer?
GDP records the market value of current production, but it does not fully subtract pollution, loss of biodiversity, or depletion of natural resources. Production can therefore increase while environmental quality and long-term welfare decline. Option D is correct because the unpriced or incompletely priced damage is missing from the headline GDP figure. The other options wrongly deny environmental importance or make an absolute claim about resources.
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.
