FRG Economy

Question 1

How did the Korean War help Germany

Answer 1

Brought a sharp rise in demand for German goods

Question 2

How did consumer goods help the economic recovery

Answer 2

Huge demand for consumer goods unavailable in the war helped to drive strong growth

Question 3

How did Adenauer integrate with Europe

Answer 3

Sought to co-operate with France, became a founding member of European Coal and Steel Community in 1951 and EEC in 1957, maximising global trade

Question 4

What did the Investment Aid Law do

Answer 4

Provided government subsidies to aid recovery of heavy manufacturing

Question 5

What was Erhards economic philosophy

Answer 5

“Social market economy” ideals, private businesses free to set prices and wages, government provided framework. State regulated competition and labour relations

Question 6

Why was Erhard appointed

Answer 6

He was a highly qualified economist who gained experience in running economic affairs under Allied occupation in 1945

Question 7

Why did the combination of Adenauer and Erhard work

Answer 7

Adenaur provided stable political leadership that allowed Erhard to remain in position long enough for his economic measures to flourish

Question 8

How did the Allies aid the German economic recovery

Answer 8

The period of Allied occupation had been keen to listen to German economic ideas, eg removing wage controls and credit for small industry

Question 9

Why did Adenauer receive American aid

Answer 9

He used the “Cold War” card well, playing on American fears to receive political backing

Question 10

When did Germany implement currency reform

Answer 10

1948

Question 11

How much did the Marshall plan give to Germany

Answer 11

$1.5billion from 1948-52

Question 12

How did currency reform and American aid help Germany

Answer 12

Allowed FRG to buy essential equipment and invest in heavy machinery

Question 13

Why did the military spending ban help the FRG

Answer 13

FRG did not have to invest in rearmament, unlike Britain who was spending 7% of GDP

Question 14

How did geographical factors aid FRG

Answer 14

FRG had no colonies to sustain, and inherited the historically strong manufacturing area of the Rhineland

Question 15

What was the state of the labour market in the FRG

Answer 15

Millions of refugees fleeing Poland and other soviet zones provided a plentiful labour force

Question 16

Why did the destruction of old factories help FRG economic recovery

Answer 16

The loss of the old factories forced investment into new industrial complexes

Question 17

How did Nazi-era investment help the FRG

Answer 17

Investments in communications, vehicle manufacture, chemicals and light manufacturing began to pay dividends. Most essential infrastructure survived the war, so German goods were high value and technically advanced

Question 18

How did the Nazi legacy aid leadership

Answer 18

Most post-war planners and managers began under Hitler and the incredible organisational skills of the Nazis

Question 19

How did Speer allow this economic miracle

Answer 19

Sprees administrative measures implemented from 1942 to 1945 provided a framework for this economic recovery

Question 20

What were the 1948 currency reforms

Answer 20

Germany exchanged the old Reichsmark for the new Deutschmark, with cash exchanged at a ratio of 100RM to 6.5DM

Question 21

Who won and lost from the 1948 currency reform

Answer 21

The owners of physical assets, such as goods or real estate benefitted, while savers lost out

Question 22

How much had food production dropped after the war

Answer 22

By half

Question 23

How much did currency reform limit the national cash pool

Answer 23

By 93%

Question 24

When did Erhard remove Price Controls

Answer 24

June 21 1984, same day as currency reform

Question 25

What was FRG tax policy post war

Answer 25

After the war, there were widespread tax cuts to stimulate growth and investment