Final answer:
The U.S. government's spending on the war effort during World War I and World War II resulted in double-digit inflation in the United States due to an increase in the money supply and a decrease in the production of consumer goods.
Step-by-step explanation:
The impact of the U.S. government's spending on the war effort during World War I and World War II was double-digit inflation in the United States.
During both wars, the government spent large sums of money to finance the war effort, which led to an increase in the supply of money in the economy. However, the production of consumer goods was reduced as resources were diverted to support the war. This resulted in a situation where there were too many dollars in circulation, but too few goods available for purchase.
After the wars ended, the pent-up buying power surged forth and drove up inflation. Prices of goods rose dramatically, and the value of the dollar declined. Although the government implemented price controls during the war, they were lifted after the war, contributing to the inflationary pressures. It took some time for the forces of supply and demand to stabilize prices, but the postwar period eventually saw material progress in the United States.