If both countries agree on a certain level of arms in an arms race game, social welfare will increase if both countries keep their end of the bargain.

Question

Quizplus · Accepted Answer

If both countries agree on a certain level of arms and maintain it, it reduces the fear of an arms race and frees up resources for social welfare programs. This promotes peace and stability, which is beneficial for the development of the society as a whole.

If Both Countries Agree on a Certain Level of Arms