Q:

What are the negative effects of war on economy?

A:

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.

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

Related Questions

  • Q:

    What is an agrarian economy?

    A:

    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 >
    Filed Under:
  • Q:

    Why is deflation bad for the economy?

    A:

    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 >
    Filed Under:
  • Q:

    What are characteristics of a planned economy?

    A:

    A planned or command economy is one in which major functions, such as production and distribution of goods, are controlled by the government. In a planned economy, the government owns some or all production facilities and decides what to produce and how goods are priced. This is in contrast to a market economy, where production and distribution are decided by market forces with little or no government intervention.

    Full Answer >
    Filed Under:
  • Q:

    What is a national economy?

    A:

    A national economy refers to the economy of an entire country. The national economy includes financial resources and management. It encompasses the value of all goods and services manufactured within a nation.

    Full Answer >
    Filed Under:

Explore