Which of the following accurately indicates how the recent outbreaks of terrorism have influenced the GDP of western nations?
A) Additional expenditures on security designed to protect individuals from terrorist attacks are subtracted from GDP.
B) Additional expenditures on security designed to protect individuals from terrorist attacks are added to GDP as part of output.
C) Since expenditures on the prevention of terrorism do not contribute to the well-being of individuals, they exert no impact on GDP.
D) Since terrorism is merely a redistribution of output, expenditures on the prevention of terrorism do not contribute to GDP.

Question

Quizplus · Accepted Answer

Expenditures on security are considered part of government spending, which is a component of GDP, thus they are added to GDP as part of output.

Which of the Following Accurately Indicates How the Recent Outbreaks