Why is GDP overstated in terms of the environment?
What will be an ideal response?
GDP does not account for the environmental degradation that results as a part of production in some industries. This pollution can take the form of noise, dirty air, polluted water, toxic waste, or congestion. Even though pollution is a cost of production, firms are not forced to pay these costs because pollution is no excusable, but rather occurs in commonly used space such as the atmosphere, water system or roads. These costs are ignored when calculating GDP and the overstatement of benefits is exaggerated by including the money spent to clean up pollution in GDP.
You might also like to view...
When private expenditures decrease as a result of increased government spending, this is known as
A) the multiplier effect. B) the stabilizer effect. C) government deficit spending. D) the crowding out effect.
Demand curves are negatively sloped when people buy:
a. less as the price decreases. b. more as the price increases. c. the same amount as the price changes. d. more as the price decreases. e. less as incomes decrease.