Germany Booklet 11: (FRG) Economic Development & Policies 1945-89

Question 1

How much did west Germany get from marshall aid?

Answer 1

$1.4 billion

Question 2

What is a social market economy?

Answer 2

Free enterprise but with government oversight and guaranteed right for employees

Question 3

When was the Deutschmark introduced?

Answer 3

on 20th June 1948

Question 4

How and why did absenteeism reduce in the early years of the FRG?

Answer 4

It went from 9.5 average weekly hours, to under 2 hours. This was due to the end of rationing and price controls, making food cheaper so people didn’t need to spend time queueing, bartering and travelling into the countryside to get food.

Question 5

How did the loans to increase business production affect unemployment in the FRG?

Answer 5

It reduced it from 10.3% in 1950 to 1.2% by 1960, increasing standards of living and reducing poverty

Question 6

What is Co-determination?

Answer 6

Encouragement of employees to participate in decision making in industry.

Question 7

What did the end of rationing and price controls mean for goods and food?

Answer 7

This meant that producers would have more incentive to produce and farmers to send their food to markets and so goods would return to markets. People could afford goods which reemerged because they had been hoarding their worthless currency which they could now trade for the new currency, as a result the black market appeared

Question 8

Summarise the four key points of the German economy 1948-1955

Answer 8

Tax reforms
End to rationing and price controls
Capitalist market with socialist elements (social market economy)
Ludwig Erhard and currency reform

Question 9

What was the Anti trust law and when was is passed?

Answer 9

1957 - designed to prevent and dismantle economic cartels and monopolies - encouraging competition

Question 10

What was the investment aid law and when was it passed?

Answer 10

1952 - provided DM3.2 billion to industrial development

Question 11

Outline the banking controls put in place in 1952

Answer 11

The central band DEutsches Bundesbank was created with the authority over monetary policy. It had the power to raise interest rates or control the circulation of money within the economy, helping to control inflation

Question 12

Outline the marshall plan for the FRG

Answer 12

$1.4 billion from the USA between 1948-52 enabled German industry to rebuild, modernise and buy new equipment

Question 13

How did the Korean war affect the German economy?

Answer 13

1950-53 - the economy was stimulated by the outbreak of the war as it resulted in a rise in demand for German exports such as industrial goods and motor vehicles. This boosted industrial production, creating more jobs within the FRG

Question 14

How many emigrants fled to the FRG from the GDR and how many found employment, how?

Answer 14

Two million, who were all employed by the public works schemes - the FRG had full employment

Question 15

How did the limits put on the FRG by NATO benefit the FRG?

Answer 15

Due to the limits on the army, there was also limited defence spending, and a minimal need to produce military products, leaving more availability for consumer goods.

Question 16

Summarise the economic foundations of the FRG

Answer 16

They had good sea ports, an abundance of certain raw materials like coal, and an educated and skilled workforce. Despite the destruction caused by WW2, the foundation was solid, and they were able to rebuild the factories more modern

Question 17

What happened to the trade deficit of the FRG between 1949 and 1952?

Answer 17

A trade deficit of DM3 billion in 1949 had moved into profit by 1952 and maintained a favourable balance throughout the decade

Question 18

How did Erhard respond to the mounting economic problems 1965-69?

Answer 18

He cut his spending plans by 10% and suggested that German workers might have to work an extra hour per week, he also raised interest rates

Question 19

What was the response to Erhards response to the 1965-69 recession?

Answer 19

They did not have the desired effect, and Germany slipped further into recession, the trade unions rejected his policy for an extra hour working per week.
In December 1966, Volkswagen caused shock waves by introducing short-time working

Question 20

What would the FRG need to do to pay for increased public spending and greater wage demands in the late 60s?

Answer 20

raise productivity and sell even more abroad and while exports remained buoyant, within the context of a global downturn, this was a difficult proposition.

Question 21

By what percentage of GDP did Brandt’s government increase social welfare?

Answer 21

from 25% to 33% during his time in office

Question 22

What are three examples of educational social welfare reforms enacted by Brandt’s government?

Answer 22

300% increase in expenditure on education and scientific research
Educational support law made more grants available to poorer students who wanted to attend university
School leaving age raised to 16

Question 23

What are four examples of pension social welfare reforms enacted by Brandt’s government?

Answer 23

pensions for those wounded in the war raised 5%, and for widows of German soldiers by 16%
Flexible retirement age introduced - state pensions could be accessed after age 63
full-time carers who might not be in paid employment given state pensions

Question 24

What are three examples of Healthcare social welfare reforms enacted by Brandt’s government?

Answer 24

Grants to help parents caring for sick children
preventative medical examinations for all children under the age of 5 and early cancer detection in women over 30 and men over 45 years of age
Health insurance extended to different groups, including self-employed, agricultural workers and dependants who were previously not covered

Question 25

What is an example of a housing social welfare reform enacted by Brandt’s government?

Answer 25

Social housing budget increased by 36%

Question 26

What was the european coal and steel community?

Answer 26

Belgium, Luxembourg, the Netherlands, France and the FRG, all combining their industry under one banner.

Question 27

How did the European coal and steel community improve eurpoean relations?

Answer 27

It improved the friendship between the FRG and France and made the rest of Europe put more faith in the FRG

Question 28

How did the European coal and steel community benefit the trade of the countries involved?

Answer 28

trade in coal increased 10x among the members and it fulfilled an important welfare function, for example, providing 112,500 apartments for workers in the coal and steel industries.

Question 29

Why do some people see the FRG as the leader of the EEC near the beginning?

Answer 29

Because they payed the largest share of the budget (28%), they supported the needs of smaller countries, rather than just their own, they always had clear knowledge of how they wanted the EEC to develop through greater innovation

Question 30

Summarise the percentage of certain goods that the FRg got from integrating with the EEC by 1989

Answer 30

25 % of chemical goods, 23% motor vehicles, 17% electrical goods, 16% textiles and 14% iron and steel.

Question 31

What happened to the exports in the FRG under Kohl? what were the results of this?

Answer 31

They rose significantly to give an increasingly favourable balance of payments surplus, from DM 73.4 billion in 1985 to DM 134 billion four years later

Question 32

What were the main economic actions of Kohl’s government?

Answer 32

They reduced government spending and implemented tax cuts. They kept budget increases to a maximum of 3%
They tried to increase privatisation

Question 33

What was the people’s response to Kohl’s privatisation policies?

Answer 33

This was met with opposition from both the unions and the civil service. This was partially because the major industrial areas were already private, while it was widely felt that public assets such as telecommunications, public utilities, banking and state owned airline, lufthansa

Question 34

What was inflation by 1986?

Answer 34

less than 1%

Question 35

What were some of the results of the 1973 oil crisis on the FRG?

Answer 35

The FRG had to pay Dm 17 billion more for its imports and the balance of payments went from a surplus to a $692 million deficit within a year. . Unemployment rose from 1.2% in 1973 to 4.7% by 1975

Question 36

What are two examples of publicity-catching measures to try and deal with the 1973 oil crisis?

Answer 36

Car-free sundays to save on fuel

a ban on the recruitment of migrant workers