Economics · May / June 2016 · Paper 12 · Question 29

It has been suggested that all countries producing arms should ban the export of weapons and cut production in order to reduce the risk of war. What would happen if this occurred?

1. AThe balance of payments on current account of countries exporting weapons would immediately improve.
2. BThe price of existing weapons would fall.
3. CThere would be a risk of structural unemployment in countries that are major producers of weapons.
4. DThere would be no overall effect on the balance of payments as countries would produce their own weapons.

As printed in the paper