A new technology is discovered which results in all new cars producing 50 percent less pollution.Which of the following is true?
A)GDP will increase to reflect the fact that the air we breathe is cleaner.
B)GDP will increase if there is an increase in the production cost and price of the car.
C)GDP increases anytime pollution is reduced.
D)GDP will decrease.
E)Real GDP increases because the air is cleaner,but nominal GDP does not change since air is free.

Question

Quizplus · Accepted Answer

GDP will increase if the production cost and price of the car increase, as GDP measures the market value of all final goods and services produced. Cleaner air itself does not directly affect GDP.

A New Technology Is Discovered Which Results in All New