If spending on security services rises because crime increases, what divergence may occur between GDP and welfare?

Correct answer: GDP may rise while welfare falls because of insecurity

GDP counts paid security services as market production, so increased expenditure can raise measured output. It does not, however, subtract the fear, injury, property loss and reduced freedom caused by rising crime. Thus defensive spending may increase GDP while the underlying quality of life falls. Option C correctly captures this divergence; the words “necessarily” in A and the claims in B and D are unsupported.