Question

1. The Washington Post reports India is pursing tighter environmental regulations. For example, the "Clean India Mission" seeks to end single-use plastics by 2022. What would be the effect on India's GDP?

(A) GDP will be unaffected since pollution is an intermediate by-product.

(B) GDP would increase reflecting the fact that the environment would be cleaner.

(C) GDP would increase as the citizens of India are made better-off as the environment is cleaned up.

(D) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP.

(E) GDP would decrease if the environmental regulation reduces productivity by more than the cost of the controls.

Answer 1

Answer - Option C

GDP would increase as the citizens of India are made better off as the environment is cleaned up.

The citizens would get a better mobility in cleaner environment . The employment will increase as the work of reduction of pollution increases. Also the costs which would increase the prices of products would be adjusted by the citizen as the Green GDP. Hence there will be no loss to the economy.

The GDP will not decrease because the costs are automatically adjusted by the economy as a measure of welfare or Green GDP. Hence option C is most accurate.