How do democratic government mobilize their economies for war?

Answer 1

In general a democratic government uses exceptional legislative power to create a war economy. A war economy is highly planned and funnel resources into the production of war time goods. This can either be accomplished through voluntary reductions or legislated reductions. This can take the form of rationing and limits on production. For example in many countries there were rations on sugar and gasoline which required ration stamps to purchase. The government can also call for a decrease in activity in an industry. For example car manufactures can be asked (or legislated) to reduce the production of civilian vehicles to reduce resource consumption (like rubber for tires) to focus on building and supplying military vehicles; Ship yards can be asked to stop making private craft and divert there industry to military activities.

Governments can also raise money for the funding of war by issuing bonds which are re-paid when hostilities end.