When the share of government spending in GDP increased in the United States during World War II,

Question

Quizplus · Accepted Answer

When the share of government spending in GDP increased during World War II, investment's share of GDP fell. This was because the government diverted resources towards defense spending, which left less resources available for private investment. However, consumption's share of GDP also increased, as workers' wages increased due to high demand for labor in the wartime economy. Government spending did not necessarily crowd out other forms of spending, as it played a key role in stimulating economic activity during the war.

When the Share of Government Spending in GDP Increased in the United