What Would Happen to GDP If the Amount of Pollution

question 150

Multiple Choice

What would happen to GDP if the amount of pollution increased, ceteris paribus?

• A) GDP would decrease since consumption would be lower.
• B) GDP would decrease since government spending would have to increase.
• C) GDP would remain the same since an increase in consumption would be offset by a decrease in investment.
• D) GDP would remain the same since pollution is not reflected in the value.

---

Definitions:

Tax Base

The total amount of assets or income that can be taxed by a government, forming the foundation of its revenue.

Progressive Tax

A tax system in which the tax rate increases as the taxable income increases, placing a larger financial burden on wealthier individuals.

Marginal Tax Rate

The rate at which your last dollar of income is taxed, often increasing as income rises.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, showing the share of income paid in taxes.