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If spending on security services rises because crime increases what relationship may exist between GDP and welfare?

Answer and explanation

Correct answer: GDP may rise while welfare falls

GDP records the market value of currently produced security services, so higher spending on guards, alarms, or police services can raise measured GDP. However, the rise in crime creates fear, insecurity, property losses, and defensive costs that may reduce people’s well-being. Therefore, option A is correct. Option B is too certain, C is false because market security services are included, and D has no economic basis.

Related tags

GdpWelfareCrimeSecurityDefensive-SpendingGdp And WelfareNational Income And Related AggregatesEconomics

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