Which of the following is a CORRECT statement about the Gross Domestic Product (GDP) and other economic indicators?

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"Life satisfaction" is an alternative to GDP that aims to measure the extent to which countries deliver long, happy, sustainable lives for the people that live in them, and generally levels off even as GDP continues to increase.

Option 1: This statement describes a concept sometimes discussed in well-being or happiness economics, highlighting that life satisfaction is often treated as a separate indicator from GDP and may plateau even as GDP grows. It captures the idea that GDP growth does not automatically equate to higher perceived life satisfaction, emphasizing the nuance between economic output and well-being.

Option 2: "Both the GDP and life satisfaction rise in a 1 to 1 relationship." This is generally incorrect in empirical research. While GDP can correlate with life satisfaction, the relationship is not consistently one-to-one across countries and time. Other factors such as inequality, health, environment, and social connections can modulate how GDP changes translate into perceived well-being.

Option 3: "GDP and general well-being (which includes economic prosperity, life expectancy, and education) generally rise together in a 1 to 1 relationship" This overstates the monotonic and unitary link between GDP and a broad construct of well-being. General well-being encompasses several dimensions beyond GDP, and their relationship is not fixed at a perfect 1-to-1 ratio; gains in GDP do not automatically guarantee proportional improvements in health, education, or overall well-being.

Option 4: "The U.S. scores among the highest on life satisfaction" This is not supported by many cross-country surveys, where some high-GDP countries do not top life-satisfaction rankings, which depend on multiple social, political, and cultural factors. The statement is too absolute and ignores comparative data trends across nations.

Overall, the first option correctly reflects the distinction between GDP and life satisfaction as separate indicators and notes the common empirical observation that life satisfaction may level off as GDP rises, whereas the other options misstate the nature or strength of the relationships between GDP and well-being in general.

ENVIR 100 (Sp25) Exam 3

Which of the following is a CORRECT statement about the Gross Domestic Product (GDP) and other economic indicators?

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