Reports have shown that the negative effects of war on economy include increased public debt, increased levels of taxation and inflation. The negative effects of war on economy are due to the macroeconomic effects of the United States government spending which has occurred since World War II.Know More
It has also been shown that through excessive spending on the military for things such as weapons and military pursuits, other areas that could use investments are ignored when it comes to spending such as education, infrastructure and high-tech industries. The problem is that the effects of military spending (such as money spent on surplus machinery) are not productive when compared to the economic needs of these other areas.
Many people have argued that government spending during war brings about positive economic benefits that cannot be ignored in a discussion about the negative economic problems of war. However, these positive economic benefits are short-lived and can only be seen in the short-term. There will be economic growth that happens when conflict spending increases, but this ends quickly leading to the residual negative effects that hurt the economy in the long term. The United States has thus far paid for all of its wars through debt, inflation or taxation.Learn more about Economics
Deflation is bad for the economy because it causes delayed spending, nominal wage cuts, higher interest rates and a higher burden of debt ratio. Deflation is the opposite of inflation and generally causes prices to go down after a recession.Full Answer >
In a traditional economy, products and goods are created as a result of traditions, customs and beliefs. Countries with a traditional economy use the barter system or trading as a primary form of currency. This type of economic system is generally found in rural areas or farm-based areas.Full Answer >
An agrarian economy is a type of economy that relies primarily on agricultural industry including livestock farming or crop production. It is a form of economy whose major factor of production is the agricultural land. Prosperity of agrarian economy is also influenced by other factors such adequate rainfall, suitable climate and inputs like fertilizers.Full Answer >
Although the world has seen multiple centrally planned economies, two of the few remaining examples as of 2015 are Cuba under Fidel and Raul Castro and North Korea under the Kim dynasty, according to the Heritage Foundation and Asian Trade Hub. The most notable historic examples of centrally planned economies include Russia under Joseph Stalin and China under Mao Zedong, according to About News.Full Answer >