Economics in the FRG Flashcards
(9 cards)
What is a Social Market Economy?
A social market economy is a system that combines the efficiency of free markets with social welfare provisions, aiming to balance economic growth with social responsibility.
What was the Marshall Plan?
1948 loan from the United States in which $13.3 billion was loaned to Western European countries. Despite the large sum of money, this only made up less than 5% of Germany’s national income at the time
Following the war, what ensured there was a constant shortage of goods?
Price controls were implemented by the Allies that led way for a black market to thrive in which the main currency was cigarettes as the Reichsmark held no value.
What was the impact of the black market for businesses?
Businesses had no insentive to produce any goods as no one would purchase them due to inflation.
What was the Morgenthau Plan and what was the result going to be?
It was a plan first proposed in 1944. In which the Allies would weaken Germany by confiscating and destroying any machines that produced arms to eliminate the threat of another uprising. However, by 1947 it was apparent that the reduce in economy would result in 25 million deaths.
What policy did Walter Eucken promote that changed the economy for the better?
Social Market Economy in 1949 and was implemented by Chancellor Konrad Adenauer
What new currency was introduced?
The Deutschemark was introduced on Sunday 21st Jun 1938 (as no one was working on Sunday no one could oppose the currency) and its value was tied the United States economy and gold. It was worth 93% more than the Reichmark meaning Reichmark owners lost 93% of their wealth.
What was removed in order to produce more products?
Price controls in 1948.
What reforms was introduced?
Tax reforms was introduced and had the following effect:
- Corprate tax rates was 50%
- Middle earners were taxed 18%
- High earners (250,000+) were taxed 95%
Price controls were removed in 1948
Deutschemark was introduced in 1938
