The Government takes control of the economy (1942 - 45)

As production of good for the war increased less goods remained for the people. This meant that demand increased and supply decreased. The government took several measures in order to control prices and combat inflation.
FDR created the office of price administration in order to fight inflation. The office of price administration, or OPA, froze prices, wages, and rents. In addition to this the OPA increased income tax rates and extended the tax to a wider range of people. This had the result of decreasing demand because people had less money to spend. The government also reduced demand by encouraging people to use their money to buy war bonds.
The OPA also set up a system of rationing which established fixed allotments of goods deemed essential for the military. Most people accepted rationing but inevitabley a black market was formed.
In order to ensure the armed forces and war industry had sufficient resources and supplies the war war production board was created. The war production board rationed fuel as well as other war materials and organized collections of goods that could be recycled for use in war efforts.
Rabea and Lisa