How did World War II change the economy?

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The Japanese attack on Pearl Harbor on December 7, 1941, electrified the nation and transformed its economy. The War Powers Act was passed less than two weeks later. It regulated industry and business. The whole economy was put on a war footing.

The War Production Board administered the war economy. Car production nearly ceased as factories converted to the manufacture of tanks and planes. President Franklin Roosevelt wanted a "crushing superiority of equipment." The military-related share of the economy increased from a mere 2 percent to 40 percent by 1943.

The war was financed by the Revenue Act of 1942. This measure increased taxation, and more people became taxpayers. The government borrowed too.

As the economy took off, inflation became a concern. In 1942 the Office of Price Administration was established. Fortunately, inflation was not as severe as it had been in World War I. Essential consumer goods were rationed.

For labor, the war had mostly positive repercussions. Unemployment went from 14 percent to 2 percent by 1943. But unions were curtailed and strikes were virtually forbidden.

In summary the war completely changed the economy. The Great Depression was finally defeated, and the country emerged in 1945 as the richest in the world.

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