ECONOMY

Question 1

How many Germans returning from war?

Answer 1

10 million

Question 2

Short term problem?

Answer 2

Housing & need for rationing

Question 3

Long term asset?

Answer 3

Large workforce kept wages low

Question 4

What was Bizone, and when was it created?

Answer 4

Bizone (American & British zones of Berlin combining)
Created on 1st Jan 1947

Question 5

Truman Doctrine?

Answer 5

need to contain the spread of communism

Question 6

Marshall Plan?

Answer 6

economic aid for US allies

Question 7

currency reform introduced to all 3 western zones?

Answer 7

20th June 1948, the Deutsche Mark

Question 8

Berlin crisis (& subsequent blockade)?

Answer 8

Stalin’s attempt to prevent a West German state being formed
Leads to the creation of NATO (and subsequently Warsaw Pact)

Question 9

12th May 1949

Answer 9

Berlin blockade ends

Question 10

23rd May 1949

Answer 10

BRD / Federal Republic (FRG) established (“Trizone”)

Question 11

7th October 1949

Answer 11

DDR / German Democratic Republic (GDR) established

Question 12

Marshall Aid not accepted by who?

Answer 12

Soviet Union (and their satellite states)
Accepted by most of Western Europe

Question 13

Ludwig Erhard

Answer 13

put in charge of Bizonia / Trizonia by the allies
Academic economist - Nuremberg Business School

Question 14

Erhard’s economic stances?

Answer 14

• Believed in a third way between unrestrained capitalism and socialism
• Didn’t believe in liberalism (“laissez-faire” approach) or support nationalised industry
• Combine political and economic freedom with social justice and social security

Question 15

Erhard appointed director of Economic Council of Bizone in which year?

Answer 15

1948

Question 16

Currency reforms made by Erhard?

Answer 16

DM replaced RM; DM 6.5 per 100 RM; each adult got 60 DM
Currency reform restored confidence and led to currency revival

Question 17

How did currency revival occur?

Answer 17

Wages were finally worth something
Consumer spending increased
Production stimulated - black market ended

Question 18

Abolition of rationing and price controls?

Answer 18

June 1948
Still rationed bread & milk powder
Better than Britain - who rationed until 50s

Question 19

State of wages?

Answer 19

Kept wages fixed until 1948 (to help business)
Immigration helped keep wages lower
Rise in prices was not matched with rise in wages
Incentive to sell and consumers were confident to spend

Question 20

Equalisation of Burdens Act (1952)

Answer 20

money was redistributed to compensate those who had lost everything

Question 21

Economic recovery?

Answer 21

not immediate:
- had to replace plant and machinery,
- train workers
- issues in paying wages after currency reform

Question 22

Unemployment rates?

Answer 22

June 1948 - 442,000 unemployed (in FDR)
Jan 1949 - 937,000 unemployed
1950 - 1,869,000 unemployed
1955 - 1,074,000 unemployed
1960 - 271,000 unemployed

Question 23

Why did unemployment peak in 1950?

Answer 23

mass migration from GDR to FRG

Question 24

1948-1949 recession

Answer 24

govt wasn’t bringing in enough money to combat the money it was borrowing

Question 25

1947 - Ahlen programme

Answer 25

favoured nationalisation of industry

Question 26

West Germany's advantages?

Answer 26

- rural area - educated workforce

Question 27

How many refugees from DDR until 1961?

Answer 27

3.6 million

Question 28

How did DDR refugees help FRG's economy?

Answer 28

- educated & trained, so FRG avoided costs of training - happy with modest wages

Question 29

Korean War (1950)

Answer 29

provided economic stimulus for chemical & electrical goods

Question 30

What did FRG help with after joining NATO (1955)?

Answer 30

arms production

Question 31

Results of FRG doing well economically?

Answer 31

- industrial peace: dramatic fall in number of strikes - financial stability: FRG seen as symbol of financial correctness, emphasis on stability, avoided inflation - govt spending: social security is important - high consumer demand

Question 32

Issues which arose for FRG?

Answer 32

- goods were made too well (no need to replace) - BERLIN WALL 1961 (no more educated professional refugees!)

Question 33

How much growth in 1966?

Answer 33

2.9% - growth only increases in 1950s

Question 34

1967 - Economic Stabilisation Law

Answer 34

Govt could intervene to limit regional expenditure

Question 35

1968 - money could be moved between Länder

Answer 35

- wealthier regions would have money taken from them - central govt intervenes with local govt

Question 36

Five Year plan for…?

Answer 36

Govt spending - spent a lot on social services

Question 37

cuts in guest workers allowed in country (1967)

Answer 37

- mainly from Turkey - weren’t as well educated - language barriers - took lower wage jobs

Question 38

Erhard brought down?

Answer 38

By FPD ministers over tax increases (1966 budget)

Question 39

Oil crises 1973 & 1978

Answer 39

- 1973 war with Israel and Arab states - OPEC put up oil prices in 1973 & 1978 - ban on foreign guest worker recruitment

Question 40

Oil crises solved?

Answer 40

- emphasis on reducing oil consumption - spending cuts & tax increases (1975)

Question 41

1981

Answer 41

CDU govt (Kohl) brought in more cuts

Question 42

Reunification and unemployment rates?

Answer 42

Dropped considerably