Question

What was NOT true about the economy at the end of World War II?

Answer 1

Neither A. or B. Can be correct because during the period between 1937 and 1945 The United States Gross National Product increased in record numbers along with corporate profits due government intervention in them market place and aiding large defense companies by paying for the opening of new plants and in turn handing them over to the private sector to be run and handled thus cutting down on the amount of money companies had to pay and increasing their profits as the need for Military goods was dire during this time period. And the National Debt also increased by a substantial amount due to the borrowing of money to fund our massive push within our industrial sector. And D. Had no major impact at the time because so many people were needed in large cities to work in the newly built plants that many unemployed citizens and workers migrated to cities to work in these factories thus lowing the amount of workers in rural farm areas. Therefore C. Would be your best answer because during and at the end of the war, Consumer spending as at a all time high.

Answer 2

C.  Wage freezes reduced consumer spending ... .. that did NOT happen.
In April, 1943, President Roosevelt put a freeze on wages and prices ... and consumer spending increased.  Spending went down in some areas of the economy, in connection with the war effort.  For instance, the percentage of consumer income spent on automobiles, as well as gas, repairs, insurance, and fees for automobiles, went down by nearly 60 percent between 1941 and 1944.  But overall consumer spending increased.  Overall household consumer spending in 1941 was $2,060. In 1944, overall household consumer spending was $2,406.  


As to answer A):The gross national product (GNP) and corporate profits did double during wartime.  There is something to be aware of with that, however.  The big increases in spending were all war-related, and much work would be needed after the war to keep the economy going forward on a peacetime footing.  David Weinberger, writing in The Daily Signal (January 26, 2012), explained:   "Underneath the national numbers that seem so robust between 1941 and 1945 stood an emaciated, barely conscious private economy stripped of resources and hope. This economy, a child of the Great Depression, bore little resemblance to its muscular cousin who fought on two war fronts."

As to answer B)  The US federal debt indeed did quadruple during World War II.  In 1941, prior to the United States' entry into the war, the national debt stood at $58 billion.  By the war's end in 1945, the national debt was $260 billion.

As to answer D):  L.D. Baver, the Associate Director of the North Carolina  Agricultural Experiment Station from 1941 to 1947, explained the emphasis being given through agricultural extension programs:  "The job of farming in war time, like the job of war itself, consists in making the most effective use of all available means -- labor, machinery, fertilizer, facts"  (Research and Farming, N.C. Agricultural Experiment Station annual report, 1942).