West Germany: ECONOMIC RECOVERY IN THE YEARS 1945 TO 1965

Question 1

Identify 3 examples of economic instability after WW”?

Answer 1

• 20% of housing was destroyed with a further 30% damaged
• Food consumption per day dropped to between 950 and 1150 calories
• A lot of infrastructure and industries were damaged

Question 2

Who was appointed economics minister of the FRG in 1949?

Answer 2

Ludwig Erhard

Question 3

What was Ludwig Erhard’s vision for the economy?

Answer 3

To create a social market economy

Question 4

What happened to the currency in 1948 and why did this help the economy?

Answer 4

The Deutschemark replaced the Reichsmark which increased peoples confidence in the economy and led to rise in expenditure and production of the consumer goods —> creating stability

Question 5

What happened to the price controls and rationing and why did this help the economy grow?

Answer 5

• 24 june 1948; price controls and rationing were abolished

- More food products were being sold and now there was competition to find the best deals for products in shops.

Question 6

What happened to wages and why did this help the economy to grow?

Answer 6

Wages stayed fixed until November 1948 to allow business to establish and stabilise themselves, as well as maximise their profits.

Question 7

What was the 1952 Equalisation of Burdens Act and why did this help the economy grow?

Answer 7

Additional tax placed on all assets, which was then redistributed to many German people who suffered under the Nazi rule and during WW2.

Question 8

What was the consequence of Erhard’s economic reforms in the short term?

Answer 8

• Some businesses collapsed as the couldn’t afford to pay wages, so unemployment began to increase.

Question 9

What were the consequences of Erhard’s economic reforms in the long term?

Answer 9

The FRG experienced enormous economic growth, particularly after 1955

Question 10

What is the period between 1955-1965 known as?

Answer 10

The economic miracle.

Question 11

What happened to the FRG’s GNP between 1950-1955?

Answer 11

It almost doubled

Question 12

What happened to unemployment in the FRG by 1965?

Answer 12

It had fallen to less than 1%

Question 13

What happened to trade and exports from the FRG in the 1950s and 1960s?

Answer 13

It 1954 the rapid growth of exports meant it had already over come its trade deficit and was the 3rd largest trading power in the world

Question 14

What happened to standards of living in the FRG in 1950s and 60s?

Answer 14

Standards of living rose and people spent their money on consumer goods.

Question 15

Identify 4 reasons that led to rapid economic growth between 1955-1965?

Answer 15

• Marshall Aid
• The Korean War
• New investment
• Refugees

Question 16

How much Marshall Aid did the FRG receive by 1951?

Answer 16

Approx. $1.5 billion

Question 17

Why did the Marshall plan cause economic growth in the FRG?

Answer 17

Helped to provide Germany with the money needed to build new factories and machinery.

Question 18

When was the FRG allowed to start providing war materials again?

Answer 18

In 1955 when they joined NATO

Question 19

Why did the Korean war cause economic growth in the FRG?

Answer 19

There was a higher demand of FRG goods, which led to greater employment and an increase in production of goods.

Question 20

Why did new investment in businesses cause economic growth in the FRG?

Answer 20

Reputation of German goods improved abroad, so exports grew and profits of businesses grew.

Question 21

How many workers moved from the GDR to the FRG in the 1950s?

Answer 21

3.6 million

Question 22

Why did refugees cause economic growth in the FRG?

Answer 22

The influx of refugees meant that there were more workers in the FRG, which kept wages low, as the demand for workers was low.