Question

Sale of petrol and diesel cars is rising particularly in big cities. Analyse its impact on gross domestic product and welfare.

Answer 1

Rise in sale of petrol and diesel cars implies that the private consumption expenditure will also rise. It leads to a rise in Gross Domestic Product of the country.
However, it will not lead to an increase in the welfare of the people for the following reasons:
(i) Level of pollution will rise with rise in sale of petrol and diesel cars.
(ii) The traffic congestion on the road will worsen.
(iii) The already depleted reserves of petrol and diesel will be subjected to further depletion.