What were the reasons for the 'Economic Miracle'?

Question 1

Who was elected the first Chancellor of the FRG?

Answer 1

Adenauer

Question 2

What were the problems facing Adenauer to do with the economy?

Answer 2

-recession
-unemployment
-price rises

Question 3

What were the problems facing Adenauer to do with society?

Answer 3

-need for housing after WW2 deconstruction
-to accommodate refugees

Question 4

What were the problems facing Adenauer to do with politics?

Answer 4

-FRG still controlled by occupying powers at the start

Question 5

What were Adenauer’s aims?

Answer 5

-Western integration
-the ‘German question’->reunification but with the capitalist (doesn’t want to include the communists->’Magnet Theory’

Question 6

What were Adenauer’s aims with economic policy?

Answer 6

-Erhard’s ‘social market’ policy

Question 7

What were Adenauer’s social aims?

Answer 7

-to create social consensus through concessions (not as important as the other aims)

Question 8

What is ‘Magnet Theory’?

Answer 8

-attract support from East Germany
-to make the FRG so attractive that the DDR want to join the FRG

Question 9

What had been the economic impacts of the occupation of Germany?

Answer 9

-humanitarian crisis
-inflation crisis
-Black market economy

Question 10

What was the humanitarian crisis?

Answer 10

-in the British and American zones they had struggled to come with the humanitarian crisis, large volumes of refugees and former exiles returning
-many people had fled when the Nazis moved in so would want to move back
-women wanted to go back to work after taking over men’s jobs/roles during the war

Question 11

What was the inflation crisis?

Answer 11

-too much wage and price control to cope with the inflation crisis

Question 12

What was the Black market economy?

Answer 12

-Black market economy (don’t want) flourished until the introduction of the new currency in 1948 by Erhard

Question 13

Who introduced the currency reform?

Answer 13

-Erhard in 1948

Question 14

Who was Erhard?

Answer 14

-Minister of Economics 1949-1963
-Vice Chancellor from 1957
-Chancellor 1963-1966 (after Adenauer)

Question 15

What were the Social Market Economy aims?

Answer 15

-government getting involved in the economy to help it become more stable
-aims of the social market economy were to increase consumption and therefore cause economic growth
-aimed to combine political and economic freedom with social justice and security
-aimed to get rid of the Black Market

Question 16

What did Erhard do?

Answer 16

-ended state regulation which led to increased production
-abolished price controls

Question 17

How did what Erhard did lead to an increase in the economy?

Answer 17

-meant that the prices go down so the production went up so people had more jobs and there was a greater access of products

Question 18

What was the key aim of the ‘economic miracle’?

Answer 18

-rising consumption and economic growth were the key aims

Question 19

What was the ‘foundation crisis’? (1949-1950)

Answer 19

despite potential positives there was an initial crisis:

-price rises not matched by wages
-shortages of some resources needed for rebuilding eg coal
-initial increase in imports led to serious balance of payments deficit (lacking)
-lack of foreign currency investment
-high unemployment 13.5% by 1950

Question 20

What was the Korean War’s impact?

Answer 20

-the Korean War led to an increase in exports to America, providing economic stimulus

Question 21

When was economic recovery clearly occurring?

Answer 21

-by 1925 economic recovery was clearly occurring

Question 22

What do they want to do to help the economy?

Answer 22

-want an equal balance of imports and exports to help the economy

Question 23

What did the Foundation Crisis evidence about the economic miracle?

Answer 23

-the foundation crisis evidences that the economic miracle wasn’t perfect
-there was a volatile period before the economic boom before the economic miracle

Question 24

Why did the Korean war make such a big difference to Germany?

Answer 24

-it led to an increase in exports to America which provided an economic stimulus
-it led to an increase in exports because Germany’s main exports are machines, cars, tanks, guns etc->German engineering is a lot better than others

Question 25

What trading aspects had changed which is evidence for the ‘economic miracle’?

Answer 25

-from 1950 the balance of trade became positive due to the growth of exports-> by 1954 the FRG was the 3rd biggest trading power in Europe especially for tools, machines, cars, electronics and chemical products->at first the DM was undervalued so the price of goods was reasonable

Question 26

What had the economic growth averaged at which was evidence of the ‘economic miracle’?

Answer 26

-economic growth averaged at 8% a year->2.3% was now seen as pleasing in Britain

Question 27

What unemployment statistics are evidence of the ‘economic miracle’?

Answer 27

-by 1955 unemployment down to 4.2% and then full employment was even finding work for refugees->3 million from the GDR before 1961->by the early 1960s there were labour shortages leading to recruitment of foreign labour from Italy and Turkey

Question 28

What were the building blocks for making the FRG an ‘economic giant’? (9)

Answer 28

-Erhard’s reforms including currency reform prior to division
-FRG’s access to extensive resources
-Population was well educated and skilled
-Marshall Plan - built factories and equipped them with modern machinery using the money
-Refugees – often well educated/skilled
-Increase in demand for capital and consumer goods
-Effectiveness of Bundesbank
-Govt expenditure low – no reparations or defence costs
-World Trade – ECSC (European Coal and Steel Community) 1951 and EEC (European Economic Community) 1957