ECONOMIC STABILITY IN THE YEARS 1965 TO 1989 Flashcards
What did the FRG experience between 1966 and 1967?
The country experienced its first reccesion.
Identify three consequences of the economic recession of 1966 to 1967.
- Trade reduced.
- Production decreased.
- Unemployment increased.
- There were “guest workers” from abroad (1966: 1.3 million workers; 1967: 991,000)
How did the government approach the economic recession of 1966 to 1976?
The government decided they had to interfere in the running of the economy and the management of the economy was reorganised, giving greater power to the Bundestag to manage money supply and a new system of federal/regional budgeting
By how much did government spending increase between 1965 and 1970?
They increased spending (In 1965, the government spent DM 46.7 million on social welfare. By 1970, this was DM 115.9 million).
What two laws were introduced to help the government deal with the economic crisis?
- The Economic Stabilisation Law was introduced in 1967, which gave the government power to intervene in times of economic crisis to limit regional spending.
- In 1968, a new clause was added to the Basic Law, which said that the government had the authority to move money between the Länder.
What did the government set up to control price levels?
• They introduced cartels to stop prices from rising.
What affected the economy of the FRG in the 1970s?
was hit by an international oil crises on 1973
Who did the FRG rely on for 40% of their oil?
FRG relied on OPEC (the Organisation for Petroleum Exporting Countries) for 40% of its oil.
How much did the FRG spend on 140 million of tonnes of oil in 1972? How much had this risen to by 1973 and 1978?
DM 10.8 billion
What measures were introduced to reduce oil consumption in the FRG?
- This included “car-free Sundays”; introducing speed limits on the autobahns; and energy saving campaigns in the home.
- The government also began to invest in atomic power to reduce the country’s dependency on fuel.
- German industries converted to new fuels.
What economic policies was Chancellor Schmidt criticised for?
• In 1975, the government brought in public spending cuts and introduced a higher income tax in 1975.
What did unemployment hit in 1981?
1.7 million
What evidence is there that the FRG governments were moving away from a social market economy?
The government cut public spending further, including benefits and housing allowances, which was deeply unpopular and demonstrated a move away from a social market economy
How did Chancellor Kohl further reduce government interference in the economy in the 1980s?
The government sold off their shares in state-run companies, such as Volkswagen and Lufthansa airlines, and partially privatised them.?
What was crucial in helping the FRG to overcome the economic problems of the 1960s and 1970s?
cut government spending more fiercely, stating that welfare created dependency on the state.
