The broken window fallacy states that when a window breaks and someone spends money to repair it, they have created new economic activity that would not have otherwise taken place.

Question

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The broken window fallacy highlights how spending money to repair damages, like a broken window, creates economic activity (e.g., paying for repairs) but overlooks the opportunity cost of what could have been done with the money if the window had not been broken.

The Broken Window Fallacy States That When a Window Breaks