Chapter 2: Problem 20

During the Second World War, Germany's factories were decimated. It also suffered many human casualties, both soldiers and civilians. How did the war affect Germany's production possibilities curve?

Short Answer

Expert verified

The Second World War significantly impacted Germany's production possibilities curve (PPC) due to the extensive destruction of factories and the loss of human lives. As a result, the country's PPC shifted inwards, reflecting a decrease in its potential output of goods and services. This inward shift indicates that Germany's production capacities for both human resources and industrial production were greatly reduced, leading to a weaker economic capacity.

Step by step solution

1. Brief the PPC concept

The production possibilities curve shows the maximum combinations of two products that an economy can produce, given its limited resources and technology. It represents the set of optimal production choices that yield the highest possible production of both goods while utilizing all available resources efficiently.

2. Analyze Germany's pre-war PPC

Before the outbreak of the Second World War, Germany's PPC was at a certain level, considering the available resources, technology, and production abilities of its economy. It showed various trade-off combinations of human resources (civilians and soldiers) and industrial production (factories) that Germany could optimally achieve within its given constraints.

3. Assess the impact of war on factories and human lives

During the Second World War, Germany experienced significant destruction of its factories and loss of human lives. The war decimated a large number of its industrial facilities, directly affecting the country's production capabilities. The high number of casualties, including both soldiers and civilians, also led to reduced available workforce and negatively impacted productivity.

4. Identify the effect of war on Germany's PPC

As a result of the losses experienced during the war, Germany's production possibilities curve would shift inwards, reflecting a decrease in its potential output of goods and services. This inward shift demonstrates that the country's production capacities for both human resources and industrial production have been reduced due to the destruction caused by war.

5. Conclude the overall effect of war on Germany's PPC

In conclusion, the Second World War had a significant negative impact on Germany's production possibilities curve, as it resulted in a decrease in the country's production capabilities. The destruction of factories and loss of human lives led to an inward shift of the PPC, demonstrating a reduction in optimal production levels for both human resources and industrial goods, and consequently a weaker economic capacity.