Sixteen demonstrators protesting a bazaar of military weapons at the Sher-bazaar of military weapons at the Sheraton-Park here were arrested yesterday at the hotel and charged with unlawful entry after two of them chained themselves to an antiaircraft gun while others threw fake blood around the exhibit hall.

The arrests yesterday followed peaceful demonstrations on Monday by about 200 people who walked through displays of tanks, missiles and guns that are featured attractions of the Association of U.S. Army annual meeting.

The demostrators said they were protesting the Carter administration's world wide arms sales and the rising U.S. military budget. An executive of one of the organizations involved said the Washington protest is the first of several to be staged against arms sales conventions in U.S. cities.

Philip Stevens, spokesman for the Army association, said yesterday that representatives of the protesting groups had promised to monitor the demonstrations so that they would not become disruptive. But he said the arms exhibits ain the basement of the hotel and the related meetings were closed to demonstrators after the protest got out of hand yesterday afternoon.

Two demonstrators handcuffed themselves to a General Electric Vulcan anti aircraft gun, which can shoot 3,000 bullets a minute. Three other protesters unsuccessfully tried to chain themselves to a balcony overlooking the dining area where Gen. Bernard W. Rogers, Army chief of a staff, addressed the association.

District of Columbia police and hotel security men cut the handcuffs of the two demonstrators attached to the anti-aircraft gun and removed them from the exhibit hall. The three protesters on the balcony were dragged out after they had tried to chain themselves to the railing and were also chanting protests against arms sales.

Michael Klare, an executive of the Institute for Policy Studies, a private group that has frequently opposed U.S. defense policies, was among those passing out fliers protesting U.S. arms sales. Other groups participating in the protest included the Clamshell Alliance of Portsmouth, N.H., which has been opposing nuclear power plants; the Friends Meeting of Washington; SANE; U.S. People's Committee on Iran; Washington Peace Center, and Women's Strike for Peace.

"Death and profits must be stopped, the group chanted outside the Sheraton-Park entrance. Klare said that he and his allies "are trying to resuscitate that uneasiness that the American people feel about the merchants of death." He and other protesters carried banners, one of which said: "Kill Effectiveness - our most important product - Westinghouse, G.E., IBM."

Klare said the demonstrators talked to company officers at the exhibits and asked such questions as why they were selling arms to such "repressive" governments as: Brazil and Iran. The general response, said Klare was that "we don't make policy."

Stevens said a post-Vietnam high of 77 U.S. and foreign defense firms bought display space at this year's Army meeting. THe space sells for about $8.50 a square foot. One purpose of the exhibit is to acquaint military people with the latest weaponry and how it might be used by the armed services.