Great Depression Section #1

Question 1

World War I had… (3)

Answer 1

• profound economic effects during interwar period
• imbalances in international economic and financial relations
• decline of Europe and the rise of the United States.

Question 2

European countries were faced with three problems at end of WW1 (3)

Answer 2

• the payment of debts
• war reparations
• territorial changes

Question 3

WW1 Conflict entailed (3)

Answer 3

• loss of millions of lives
• the destruction of goods and infrastructure
• financial costs

Question 4

Inflation

Answer 4

excessive creation of money led to currencies being useless and prices going higher and higher

Question 5

Debt

Answer 5

countries had lots of domestic debt from the cost of war as well as foreign debt to the U.S

Question 6

Negative Effects of the Peace Treaties (3)

Answer 6

• economic areas were fragmented
• monetary unity was broken
• transport systems were disorganized

Question 7

Issue of German Debts (3)

Answer 7

• Americans wanted their debts paid and didn’t help with reconstruction
• European Allies (mostly France) wanted severe financial reparations
• 132 billion gold marks ($33 billion) to be paid by Germany over 42 years

Question 8

WWI Trade Imbalance

Answer 8

non-industrialized countries, exporters of raw materials, and the industrialized nations were imbalanced

Question 9

Between 1914 and 1920…

Answer 9

everything got more expensive as Europeans needed so much of the material produced for war

Question 10

After 1921….

Answer 10

imports fell, while exports from the industrialized countries increased, which created a financial crisis for non industrialized countries

Question 11

Inflation from the Gold Standard

Answer 11

Europeans printed more money than they could back up in their gold reserves

Question 12

Results of Inflation from the Gold Standard (3)

Answer 12

international trade was dislocated, monetary anarchy ensued and inflation soared.

Question 13

1920s change from Europe to U.S. (3)

Answer 13

• U.S. did 42.2% of manufacturing production and main European countries fell to 33.8%
• U.S from debtor country to creditor country
• U.S. dollar replaced the pound sterling

Question 14

Sharp Increase in European Demand

Answer 14

• resulted from WWI
• UK, US, Japan and Canada benefited from increase

Question 15

Short Crisis of 1920-1921 (2)

Answer 15

• economic growth and war debt led to a sharp rise in prices that generated inflation worldwide
• economic growth stopped when US stopped its foreign credit policy

Question 16

Countries most affected by Crisis of 1920-1921

Answer 16

United States, United Kingdom, Germany and Italy.

Question 17

Recovery 1921-1925

Answer 17

Countries tried to recover from mini crisis by curbing inflation and returning to gold standard

Question 18

Main causes of the rise in inflation (3)

Answer 18

• economic boom generated by European war reconstruction
• the consequent rise of prices
• abandonment of the gold standard

Question 19

1920 Central Europe

Answer 19

Experienced a depression and deflation (prices began to decline)

but it was stopped by help from U.S. and U.K.

Question 20

Anti Inflation Consequences (3)

Answer 20

• immediate drop in production
• increase in the number of unemployed (5 million in U.S and 2.5 million in UK)
• increased protectionism

Question 21

Germany Post War Economy (3)

Answer 21

Printed excess bank notes and experienced hyperinflation, economy collapsed and was unable to repay war debts

Question 22

Why the Genoa Conference was called in 1922 (3)

Answer 22

reestablish the monetary system, stabilize currencies and return to the gold standard

Question 23

What did the Genoa Conference of 1922 do (2)

Answer 23

• Created the gold exchange standard (backing one’s own currency partly with gold reserves and partly with foreign currencies)
• Tried to remove protectionism and failed

Question 24

Dawes Plan 1924 (4)

Answer 24

• aimed to normalize the German economy
• adjusted the payments Germany had to make each year
• granted Germany a large loan
• made Reichsmark stable