If a falling crime rate reduces government spending on prisons and security, which conclusion is correct?
Answer and explanation
Correct answer: Recorded output may fall while welfare rises through improved safety
Some government spending is defensive: it responds to undesirable conditions rather than directly creating new welfare. If crime falls, fewer resources may be needed for prisons and security, so measured expenditure and recorded GDP could decline. At the same time, safer communities improve well-being and may reduce harm. Thus D is correct; A and C ignore safety benefits, while B claims a result not guaranteed by the facts.
Frequently asked questions
What is the correct answer to this question?
Recorded output may fall while welfare rises through improved safety
Why is this the correct answer?
Some government spending is defensive: it responds to undesirable conditions rather than directly creating new welfare. If crime falls, fewer resources may be needed for prisons and security, so measured expenditure and recorded GDP could decline. At the same time, safer communities improve well-being and may reduce harm. Thus D is correct; A and C ignore safety benefits, while B claims a result not guaranteed by the facts.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
