DEFINITION of 'War Economy'

The organization of a country's production capacity and distribution during a time of conflict. A war economy must make substantial adjustments to its consumer production in order to accommodate defense production. Governments must choose how to allocate their resources in a war ecomony very carefully in order to achieve military victory while meeting vital domestic consumer needs.

BREAKING DOWN 'War Economy'

All of the major members of both the Axis and Allied powers had war economies during World War II. America's economic strength was a vital pillar that allowed the Allies to receive the money and equipment needed to defeat Axis.

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