Guns and butter explains the relationship between two goods that are important for a nation's long-term economic growth and stability. This classic example of the production possibility frontier (PPF) defines the relationship and conflict between a nation's investment in the military, defense and civilian goods.

Countries need to choose between two options when spending finite resources, either buying goods that benefit local citizenry or applying those resources to territorial expansion and security, allocating capital to military forces and equipment. These opposing priorities characterize a nation's choices and identity in first world societies.

Politicians use "guns or butter"  arguments to state positions about national priorities, deeply impacting gross domestic product (GDP) and economic policy. All nations need to determine the ratio of guns vs. butter to meet external and internal demands. influenced by local economic conditions and the military stance of potential opponents.