GED Social Studies Test: Economic Causes and Fallout Related to War

By Achim K. Krull, Murray Shukyn

You should familiarize yourself with economic issues related to war for the GED Social Studies test. Prior to the Industrial Revolution, wars were fought by largely mercenary armies out in a field somewhere to decide which king should sit on which throne. Dynastic succession triggered all the great wars of the 18th century.

Starting with the Industrial Revolution, economics became a much more significant factor. The American Civil War is a case in point. For the South, the survival of slavery was an economic issue, not a moral issue. Southern society couldn’t survive as it was without the cotton trade, and the cotton trade depended on slavery.

World Wars I and II had similar economic components among the list of causes. World War I came about in part because of economic rivalries among Germany, Britain, and France. German industrialization since unification in 1871 had made it a modern industrial powerhouse. It outpaced Great Britain, where the Industrial Revolution had started. Germany’s industries were more modern and its technology more up to date.

Part of the hostility with France came from the Germans’ seizure of Alsace and Lorraine, which also became an economic issue because it deprived France of much-needed coal.

Economics also contributed to the outbreak of World War II. Germany had a large population and a booming industrial economy but only limited raw materials and agricultural output. A common theme of Hitler’s speeches was the requirement for more Lebensraum (living space) for the German people.

Similarly, Japan risked war with the United States because it needed access to raw materials in China. The United States tried to force Japan to pull back from China and proposed an oil embargo as a pressure tactic. That oil embargo became a major trigger for the Japanese attack on Pearl Harbor.

Why would a possible oil embargo cause Japan to attack the United States?

  • (A) Japan wanted to seize U.S. oil fields.

  • (B) Japan’s continuing military power depended on access to oil for its military.

  • (C) Japan needed to buy time to develop its own internal oil resources.

  • (D) all of the above.

The immediate cause was Japan’s need for oil to maintain its military. Japan had no oil resources, and its leadership knew that an oil embargo would have a serious impact on its military combat readiness. The correct answer is Choice (B). Though Japan may have wanted to seize American oil fields (Choice (A)) or develop its own oil resources (Choice (C)), the text doesn’t support these answers.

The economic fallout of wars is obvious. According to a Congressional Budget Office (CBO) document from 2007, “total spending for U.S. operations in Iraq and Afghanistan and other activities related to the war on terrorism would amount to between $1.2 trillion and $1.7 trillion for fiscal years 2001 through 2017.” Much of this cost is financed by borrowing because successive governments have reduced taxes and increased spending. That means the debt will be around for a long time. This table compares U.S. war costs in dollars.

War or Conflict Year of Spending Cost in Fiscal Year 2011 Dollars
World War I $20 billion $334 billion
World War II $296 billion $4.1 trillion
Korea $30 billion $341 billion
Vietnam $111 billion $738 billion
Persian Gulf War $61 billion $102 billion
Iraq $715 billion $784 billion
Afghanistan $297 billion $321 billion

Source: Congressional Research Service, June 29, 2010

The Vietnam War contributed to a unique economic problem: a combination of high inflation and a stagnant economy. Massive spending on the war put more money into circulation, increasing inflation. That increased interest rates, which impacted average Americans and the business community. Because much of the conflict was financed through debt, the government deficit increased significantly, with a major impact on the government’s ability to provide other services.

What is the significance of presenting the costs of war in fiscal year 2011 dollars?

  • (A) It creates larger numbers.

  • (B) It makes the comparisons more accurate.

  • (C) It accounts for interest on the debt to 2011.

  • (D) all of the above.

Representing the cost of each war in 2011 dollar amounts provides a clearer comparison of the actual costs of the wars, Choice (B). For example, you may pay 65 cents for a candy bar now that would have cost a dime in 1970, but median household income was less than $10,000 in 1970 compared to over $50,000 in 2014.

By translating the value of the dollar to a set time, you can compare expenditures over years on the same scale. Choice (A) is just silly. Choice (C) may be partially true, but accumulated interest charges are already calculated into the debt, so no extra calculations are required.