Which was an economic effect of the Treaty of Versailles? The allies were forced to pay reparations to the Central Powers. The mandate system seized European colonies in southwest Asia. Military spending increased as Germany expanded the size of its military. Production and trade were disrupted as new borders were created across the region.

The most controversial armed base treaty signed on June 1919 in which the Germans and central power holding countries were forced to take all the blames for World War I is called the Treaty of Versailles.

The correct answer is:

Option D. Production and trade were disrupted as new borders were created across the region.

This can be explained as:

The treaty caused the loss of territorial lands, armed forces and pay to the allies as reparation.

Because of this treaty, Germany had to pay a large sum of money and due to this, it lost major industrial establishments.

Germany faced guilt for starting the war and as a consequence, they lost their economy.

Therefore, the formation of new boundaries affected trade and production.

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