Question

GDP includes:

a. the value of leisure time.

b. the negative attributes in our quest for more goods and services such as soil erosion and deforested landscape.

c. the illegal activities related to the underground economy.

d. the cleaning-up expenses associated with pollution.

e. all quality improvements resulting from higher quality goods replacing inferior goods.

Answer 1

Option D.

• GDP includes the cleaning up expenses associated with pollution.
• GDP refers to the value of all the final goods and services produced in a country within a given time period.
• It does not include the value of intermediate goods, used goods, illegal activities, value of leisure rather it includes only the value of final goods and services.
• The cleaning up expenses associated with pollution are created newly when pollution occurs, hence it is included in GDP.