The first one wouldnt make sense becuase "we" is talking about you and your mother so that one is incorrect. The third would be wrong becuase youre describing yourself, not "she". The last wouldnt make snese whatsoever becuase it would damage the grammar. The only one that would work here would be the second one: I should be changed to me even though i am unsure is this is correct. :)
Well for one I think prolonged fighting might have on a country is destruction from the battle, less money which in turn equals to less food, also young men went to fight but since it was prolonged then there was more loss. Among other things.