Supply, demand, and price

Question

Is supply increased or decreased when there is war? Does the price go up or down?

Answer 1

Generally demand for certain items will increase during war, thus making the price increase.

1942 the United States had switched to a domestic wartime economy. This would lead to an increase in income, which lead to increase in food purchases¹. This would be the only "supply" that the American people spent on--this is not regarding the increase in housing as that is a necessary expense. That is not to say that the price did not increase on food costs as well, because it would increase more that 17% in stores from 1941, and in 1943 it would increase another 11%². Now, to talk on the decrease in demand, one thing that dropped sharply was automobile care. This included things such as gas and car parts, as this was more than likely viewed as a luxury that was unneeded at this time. If not being viewed as a luxury, it could have been due to production being geared towards wartime needs.

1. “Consumer Spending in World War II: The Forgotten Consumer Expenditure Surveys : Monthly Labor Review.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, August 2015. https://www.bls.gov/opub/mlr/2015/article/consumer-spending-in-world-war-ii-the-forgotten-consumer-expenditure-surveys.htm.
2. Perkins, Frances. “Retail Prices of Food 1942 and 1943 ,” 1945. https://fraser.stlouisfed.org/files/docs/publications/bls/bls_0799_1945.pdf.