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      Question

      Traditional GDP measures economic output without

      accounting for the environmental costs associated with production. In order to obtain a more comprehensive measure of sustainable economic welfare, the concept of “Green GDP” modifies the conventional GDP framework. Which of the following adjustments is primarily made while calculating Green GDP?
      A Inclusion of the estimated value of unpaid household and domestic services Correct Answer Incorrect Answer
      B Deduction of the costs associated with environmental degradation and depletion of natural resources Correct Answer Incorrect Answer
      C Addition of the value of renewable energy generation to national income Correct Answer Incorrect Answer
      D Adjustment for changes in the prices of environmentally friendly (“green”) goods Correct Answer Incorrect Answer

      Solution

      Green GDP adjusts conventional GDP by: Subtracting environmental damage (like pollution)  Subtracting depletion of natural resources (like forests, minerals)  This makes it a better measure of sustainable economic welfare, as it accounts for the environmental costs ignored in standard GDP.

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