Is it likely that the US government spending on war will help to increase or decrease US GDP? 

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pohnpei397 eNotes educator| Certified Educator

In the short term, it is likely that spending on wars will increase gross domestic product.  This is because the government borrows and spends, thus increasing aggregate demand when it spends on things that are made in the US.  However, in the long term, military spending is less likely to boost GDP than leaving the money with the private sector.  Spending on the military does not typically make for economic growth because so much of the money is spent on things (like fuel) that is just consumed and does not help increase aggregate supply.  If government spending were reduced, allowing reductions in taxes, it is likely that the private sector would be able to invest the money in ways that allow for more economic growth.