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Suppose government imposes ban on consumption of liquor . Analyse its effects on (a) GDP and (b) welfare.

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Imposing ban on consumption of liquor will drastically reduce production of liquor . As a result GDP will decline. This is the direct effect on GDP.
Reduction in consumption of liquor will significantly improve health of those who consume liquor which in turn will increase their efficiency, income , etc. This will increase welfare.

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