Question

2)How have wars affected the United States economy? Please give specific examples.

3) Today, the United States has the world's largest economy as well as a very high standard of living. What factors in our economic history helped make this possible?

Answer 1

2) The Industrial revolution which drove the American economy early on was equipped to transport goods and services and manufacture the materials at a faster pace. Wars made the American economy mass produce goods to support the economy. The debt rose during wars because government funded the war expenditure through debt for example in almost all wars it has experienced such as World War II, Cold war. Inflation was also on the rise. Public debt and taxation increased such as during Korean war and, while consumption declined during those periods, investments as a percentage of GDP also declined as people started to fear for economic growth and consumer confidence plummeted.

3) United States grew tremendously during the industrial revolution wherein its industrial production skyrocketed. The US also had a low population and comparatively less historic factors which did not impede on its growth, America followed a free market system, which made companies efficient and made them focus on economic profits, there was limited state control which led to further efficiency and prosperity. United States has a low population as compared to its peers. It was also not as severely impacted during World war 2, which led to it being the sole country which grew during the war period. This propelled it to grow much faster afterwards. To sum up its entrepreneurial spirit, quick access to labour markets, energy independence, favourable regulatory environment all helped augment economic growth of US.