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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

Guns and Butter Curve  

Definition 1.

The classic economic example of the "Production Possibility Curve" that demonstrates the idea of opportunity cost. In a theoretical economy with only two goods, a choice must be made between how much of each good to produce. As an economy produces more guns (military spending) it must reduce its production of butter (food), and vice versa.
 
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