Negative externalities reduce welfare, so there is an inverse relationship (B correct). Economic activities can generate both positive and negative externalities (D correct). A is incorrect (GDP ignores externalities, not external production); E is incorrect (producers are not rewarded for positive externalities). Hence B and D only.
Identify the correct statements about the externalities as a limitation of GDP and welfare. A. GDP as measured does not include external production…
CUET UG 2022 — Economics Macro
2022mcqmedium
Identify the correct statements about the externalities as a limitation of GDP and welfare.
A. GDP as measured does not include external production of goods.
B. Inverse relationship between negative externality and welfare.
C. No relation between GDP and welfare.
D. Economic activities have both positive and negative externalities.
E. Producers are rewarded with profit for positive externalities
Choose the correct answer from the options given below :
Official previous-year question
Verified 13 Jul 2026.
Options
- A
A and D only
- B
B and E only
- C
D and E only
- D
B and D only
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