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If GDP growth comes only from increased weapon production, which conclusion about welfare is appropriate?

Answer and explanation

Correct answer: Welfare should be concluded cautiously

Weapon production is counted in GDP when it represents current domestic production, so GDP can rise. However, GDP does not show how output is distributed, whether people prefer military goods to civilian goods, or the social and opportunity costs of defence spending. Therefore, GDP growth alone cannot prove a proportional increase in welfare.

Related tags

GdpWelfareDefence ProductionGdp LimitationsStandard Of LivingGdp And WelfareNational Income And Related AggregatesEconomics

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