Earlier quoted context omitted.
Right, so what we need to do is take into account value of space that roads will take up (that could otherwise be used for houses, businesses, parks...), and only build more roads if the value they produce outweighs the value they consume. That's not an induced demand issue though.
I would say that's a pretty clear example of induced demand and the problems arising from it. You build the motorway, people build low density suburbs outside the city to drive and take the motorway to commute into the centre, that delivers hundreds of thousands of cars into the centre which crashes the road-space efficiency of the central area, which damages not just the people driving into the centre, but also the…
More traffic on the central roads is induced demand, but as jessriedel said, that's likely a sign of added value. Cars from outside displacing cars from the centre should only happen when it's a net gain - the limited road space is being used by those who gain the most value from it. People who live nearby and use trains etc. are unaffected by traffic on the central roads and can live exactly as they would if the motorway hadn't been built. Cars displacing more efficient buses is a real issue, but a general one not really related to building motorways (an increase in local car traffic would cause the same issue), and can be solved with e.g. bus lanes, congestion charges...