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If a fall in crime reduces government spending on prisons and security, which conclusion is correct?

Answer and explanation

Correct answer: Recorded output may fall while welfare rises because people are safer

Spending on prisons and security may be recorded as output, but some of it is defensive spending to respond to crime. If crime falls, this spending may decrease, so recorded output could fall even as people benefit from greater safety. D is correct; the exact change in total GDP is not guaranteed.

Related tags

Crime ReductionDefensive SpendingGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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