ABSTRACT
An inflationary pressure arises in an economy when the ex ante or intended demand for factor services (e.g. labour and raw materials) to produce investment goods is greater than the planned supply of savings. In a war economy government expenditures make up the greater part of investment expenditure. Any private investment expenditure allowed during wartime is directed toward the furthering of the war effort. In contrast, peace-time investment is made up of such items as exports of all kinds, plant and equipment, housing and public works, and inventories of raw materials, construction and consumer goods.
