economy
Cards (29)
- 4.3 million German troops killed during the war , 2/3 of men born in 1918 didn't survive ww2
- 20 million Germans were homeless
- key industrial cities such as Dresden had been bombed by the Allies during the war
- german agricultural production in 1945 was 35% of pre-war levels
- Life for German people was not easy after the Allies occupied Germany:
- food shortages common
- civilians treated poorly by Allies
- incidences of rape common
- Reichsmark is the basic monetary unit of the Third Reich, replaced in 1948 by the Deutschmark.
- in response to Allied currency reform the soviets introduced their own currency - Soviets rejected the Deutschmark
- currency reform was successful , led to renewed confidence in German economy
- 1945 - military mark replaced by Deutschmark
- wirtschaftwonder : 1950-60
- unemployment decreased from 11% to 1.2%
- national income increased from 845 billion Deutschmark to 1,633 billion Deutschmark
- real incomes rose after 1942
- industrial development rose by 150%
- Erhard got rid of price controls - increased supply of goods
- Marshall Plan : 1948
- Marshall plan:
- $1.5 billion from US to rebuild German infrastructure
- Government introduced tax cuts - more money for consumers to spend , increased production of goods
- lower income tax decreased by 18%
- Banks = given money to loan to authorities to restart industrial investmentment
- industrial investment = increased by 50%
- investment aid law of 1952 = provided subsides to assist with industrial development
- recession in the 60's
- Grand coalition formed in response to 60's recessions
- Stabilisation Plan - 1967
- Features of Stabilisation Plan:
- improve cooperation between government, employers and employees
- increased VAT by 2%
- Grand Coalition collasped due as it couldn't agree on revaluation of Deutschmark
- Brandt's gov = raised Deutschmark value by 9%
- resulted in strong currency
- how did the FRG improve its government budget during the recession?
- increased public expenditure
- increased taxes