How War Affects the Economy
Tanner Hollrith
Mr. Reuter
Economics
17 March 2014
How War Affects Economy.
World War I and II are the greatest and the worst wars that ever happened. The U.S. was involved in both and the economy changed drastically. Wars should never happen, but when they do the economy changes in both directions.
During the First World War, the United States was neutral for most of the war. They didn’t start fighting until 1917 but they were selling U.S. good to the European allied countries. This was good for the U.S. because selling their product makes the country grow in money. In 1917 the U.S. joined and that meant more jobs were made. The unemployment rate declined from 7.9 percent to 1.4 percent in the time period. During the Second World War the United States didn’t enter until 1941 when Pearl Harbor was attacked. All of the men went to war and this is the time period when women took over. Women took the jobs that men had. This was the solution for the unemployment rate because women finally got jobs instead of staying home. This graph below shows the unemployment rate during the two world wars. The big drop in unemployment rate is caused from World War 2.
Also when it comes to war, the goods people need to survive become scarce. During war time, the supply and demand curve changes. The supply decreases and the demand increases. During World War 2 rationing and price control impacted the civilians that made most families have trouble providing food for their family. Rationing and price control was invented to not have the same problem that occurred during World War 1. Rationing is this U.S. government making the distribution of goods fair for everyone because the resources are scarce. Some goods that are rationed are gasoline, tires, sugar, meat, silk, shoes, and nylon. Citizens get booklets and tokens so they can buy what they want for the ones that are rationed. Rationing is a way to decreases inflation that occurred in the First World War. The war had to be paid and inflation occurred. Prices increased and the value of money changed. Every war causes come inflation but not at an extreme as the one from World War 1. Below is a picture of what a ration booklet looked like.
When war occurs, it just doesn’t affect the people the fight. The economy affects in a good way and a bad way. The great depression is the worst drop in the stock exchange in the history of United States. The economy was hit so hard, that according to gwu.edu a glossary on The Great Depression “By spring of 1933, when FDR took the oath of office, unemployment had risen from 8 million to 15 million”. But one of the ways that the United States did to help the Great Depression to end is the start of World War 2.
These two wars changed the way the economy is today. These are just two wars that the United States were a part of. Countries need money for wars and they will find ways to get it. Also supplies are needed and they will make more jobs or ration goods. Either way, wars impact differently. It could either be good or bad it depends on the country fighting.
Works Cited
"The Economics of World War I." National Bureau of Economic Research. N.p., n.d. Web. 16 Mar. 2014. <http://www.nber.org/digest/jan05/w10580
"The Great Depression (1929-1939). 17 Mar. 2014. <http://www.gwu.edu/~erpapers/teachinger/glossary/great-depression.cfm>.
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