Suppose the government eliminates all environmental regulations and, as a result

Question

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is much more pollution. In this scenario, real

GDP would definitely decrease because GDP includes a measure of environmental quality.

GDP could either increase or decrease because GDP includes a measure of environmental quality.

GDP would definitely increase because GDP does not measure environmental quality.

GDP could decrease, even though GDP does not explicitly measure environmental quality.

Explanation / Answer

GDP would definitely increase because GDP does not measure environmental quality.

Because GDP only measures the output in quantitative terms , not the quality of the output. So any deteriotation in enviourment quality wouldnt impact the GDP as it is not considered in GDP calculations.

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