Economic recovery and the 'economic miracle', 1945-66 Flashcards
Why were the years after the establishment of the FRG considered an ‘economic miracle’?
West Germany enjoyed strong economic growth, low inflation and rising living standards
Unemployment rate fell from?
11% to 2% from 1950-60
How much did national income increase by?
Doubled from 845 billion Deutschmarks to 1,663 billion from 1950-60
How much did industrial development increase by?
150% - industrial developments such as VW were deployed
Where was the Deutschmark (1948) introduced?
Into the non-Soviet zones of Germany to replace the Reichsmark
Was the Deutschmark entirely different to the Reichsmark?
Wage levels were the same but savings were exchanged at a very low level of 6.5 DM to 100 RM - However, debts of 400 billion RM were written off - providing stimulus to the economy
How did Germany increase industrial investment?
Banks were given money by authorities to loan to businesses - industrial investment increased by 50%
What was the result of currency reforms and The Industrial Investment Aid Law (1952)?
Businesses felt more confident to invest
How did Tax cuts benefit the economy?
. Increased the money that people had to spend -
consequently increased production of goods
. For those on lower incomes, the tax level was reduced to 18%
How did the Marshall Plan aid Germany’s economy?
1.5 billion dollars was transferred - rebuild German infrastructure and generate confidence
How was the introduction of a social market economy key in the economy’s recovery?
Combined capitalism with social welfare - helped create social harmony alongside economic growth
How did Germany intend to maintain harmony between workers and management?
Workers representatives sat on the boards of German companies and had a right to be consulted about major decisions - ensured a closer relationship - assisted with economic development
How did the development of a trade surplus improve the economy?
German manufactured goods proved to be popular around the world - surpluses could be invested in further development
How was Germany’s geographical location beneficial?
Centre of Europe - many raw materials and good sea ports which helped exporting goods
How did the pursuit of European integration help with economic stability?
E.g EEC - gave connections to export raw materials
Better connections promoted lower tariffs - helped stimulate economic trade
