GDP tends to overstate economic well-being because it takes into
account (Points : 4)
improvements in product quality
over time.
expenditures undertaken to
correct pollution.
illegal activities of
individuals and businesses.
nonmarket activities, such as
the productive work of homemakers.
Answer
Option B.
- GDP tends to over state Economic well being because it takes
into account the Expenditures undertaken to correct pollution. - Here Expenditures refers to social costs which are related to
pollution and consumption of products with adverse health
effects. - Because some of the production activities are under taken in an
Economy, pollution is created, hence GDP tends to over state social
welfare. - The harmful effects of pollution are not deducted from GDP .It
includes the payments made for over coming pollution.