Final answer:
The statement that rising living standards can lead to environmental improvements is generally true and relates to the Environmental Kuznets Curve hypothesis. However, GDP might not fully reflect changes in living standards, as factors such as environmental degradation, crime rates, variety of goods, and infant mortality are not directly counted in GDP.
Step-by-step explanation:
The question posed is a statement suggesting that an increase in living standards might lead to environmental improvements because people can afford to pay more attention to environmental care. This statement is often associated with the Environmental Kuznets Curve (EKC) hypothesis, which suggests that as an economy grows, environmental degradation increases up to a point, after which it starts to decrease as the country becomes more affluent and can invest in cleaner technologies and stringent environmental regulations.
Regarding the specific implications for GDP:
- An environment becoming dirtier would not be reflected in GDP measurements, potentially causing GDP to overstate improvements in the standard of living.
- On the other hand, a decline in crime rate would likely improve the quality of life, but since it is not directly represented in GDP, it may mean that GDP understates the standard of living.
- The increased availability of a variety of goods would likely enrich consumers' choices and enhance quality of life but may not be fully captured by GDP, possibly leading GDP to understate the standard of living.
- A decline in infant mortality would indubitably raise the standard of living; however, it is not directly included in GDP calculations, meaning GDP might understate this aspect of living standards.
The initial statement is true to a certain extent; rising living standards can result in environmental improvements, but this is not an absolute rule and depends on various factors including government policies, public awareness, and the state of environmental technologies.