POL208Y1 Study Guide - Final Guide: International Trade, Floating Exchange Rate, The Principle
Document Summary
Guns vs butter is a metaphor used to describe a trade off between military spending and spending on civilian welfare. Opportunity costs are the utility of options used as the result of making a decisions. War economy are the patterns of production for the purposes of war making. Economic welfare is the inane disturbance of an adversary"s economy to diminish its power. The concept of guns vs. butter is a common metaphor for the national production possibility frontier. As societies, we can choose between two types of goods: guns (defense) and butter (civilian). For any amount of butter produced, we sacrifice a certain amount of guns, and vice versa. In ir we assume that both are necessary, so the real choice for societies is what the balance will be between the two. The metaphor becomes very important in wartime, because that is when the trade-off becomes most noticeable.