Editing Guns versus butter model (section)

{{Short description|Macroeconomic relationship between defense spending and civilian welfare}}
{{redirect|Guns and Butter|the song|Guns and Butter (song)|the videogame|The Global Dilemma: Guns or Butter}}
[[File:Production Possibilities Frontier Curve.svg|thumb|220px|The production possibilities frontier (PPF) for guns versus butter. Points like ''X'' that are outside the PPF are impossible to achieve. Points such as ''B'', ''C'', and ''D'' illustrate the trade-off between guns and butter: at these levels of production, producing more of one requires producing less of the other. Points located along the PPF curve represent sustainable combinations of each type of production in a world where scarcity is a binding constrain. ''A'', however, is inside of the PPF and represents a combination of output that is not utilizing all available resources.]]
In [[macroeconomics]], the '''guns versus butter model''' is an example of a simple [[production–possibility frontier]]. It demonstrates the relationship between a nation's investment in [[Military budget|defense]] and ''[[civilian]] [[goods]]''. The "guns or butter" model is used generally as a simplification of [[Government spending|national spending]] as a part of [[Gross domestic product|GDP]]. This may be seen as an analogy for choices between defense and civilian spending in more complex economies. The government will have to decide which balance of guns versus butter best fulfills its needs, with its choice being partly influenced by the military spending and military stance of potential opponents. 

Researchers in [[political economy]] have viewed the trade-off between military and [[consumer spending]] as a useful predictor of election success.<ref>{{cite journal|last=Hibbs|first=Douglas|year=2010|title=The 2010 Midterm Election for the US House of Representatives|url=http://mpra.ub.uni-muenchen.de/id/eprint/25918 |ssrn=1691690 |doi=10.2139/ssrn.1691690 |volume=9|journal=CEFOS Working Paper|citeseerx=10.1.1.409.410|s2cid=154472996 }}</ref>

In this example, a nation has to choose between two options when spending its [[Non-renewable resource|finite resources]]. It may buy either guns (invest in defense/military) or butter (invest in production of goods), or a combination of both.