Question

which statement mischaracterizes the world economy in the wake of world war i?

Answer 1

As a result of World War I, the world economy saw such effects as;

• Many countries got into debt
• Inflation became rampant
• Economic power shifted from Europe to U.S.
• Production fell

As a result of the first World War, many countries became heavily indebted as a result of the having to borrow money to maintain the war effort. They also became indebted from reparations payments from the losers to the victors.

Inflation became rampant when some governments resorted to printing more currency to take care of their debt and help their economies.

Economic power also shifted from the heavily indebted and damaged countries of Europe to the unscathed U.S. which then became a leading world power.

Production also fell after the war because the demand that came with the war was massively reduced when the war was settled and soldiers came home.

In conclusion, the world economy after the second world war was quite negative.

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