Germany IGCSE – Paper 1 Economic Problems,

Vocabulary bankruptcy - A country or state that owes more money than it can ever pay back to occupy/ occupation - The action of going into a place and taking control away from the government or people there. sabotage – things that are done to stop someone from achieving something or prevent a plan/process being successful inflation – an economic process in which prices increase so that money becomes less valuable hyperinflation - an economic process in which prices increase so that money becomes less valuable to a very high degree debt – an amount of money that you owe a loan – an amount of money that a person, business, or country borrows, especially from a bank savings –money that you have saved in a bank or invested so that you can use it later passive resistance - a way of protesting against a government or law by using peaceful methods such as refusing to obey laws or refusing to leave a place or building

Problems 1st – Bankruptcy caused 2nd – Occupation of the Ruhr caused 3rd – Inflation

2. Bankruptcy Answer the questions on your worksheet about banruptcy. A. What was the first reason that Germany was bankrupt in 1918? They had spent their reserves of gold (savings) on the war. B. How did the Treaty of Versailles make things worse? It took away wealth-earning areas – eg. Coalfields in Silesia They had to pay reparations C. Why did the victors (especially France) not want to give Germany reductions in reparations? The needed money to pay war debts to the USA D. By what year could Germany no longer pay reparations? 1923

3. Occupation of the Ruhr Answer the questions about ‘Occupation of the Ruhr’ A. Put these events in order Germany stopped paying reparations The French occupied the Ruhr The French confiscate German goods, raw materials and machinery The German government called for passive resistance German workers went on strike and some sabotaged French efforts The French arrested some Germans

3. Occupation of the Ruhr B. Who were the Germans angry at about the occupation of the Ruhr? The French The Weimar Republic – only 100,000 in army – could not respond with force C. Explain one effect of the occupation of the Ruhr on Germany. One effect of the occupation of the Ruhr on Germany was unemployment. Many people working in the Ruhr used passive resistance and lost their jobs as the French took control of the area an factories, resulting in unemployment increased debt shortage of goods

4. Inflation A. Why did the prices of goods go up after the occupation of the Ruhr? Food shortages B. Why was the German government receiving less money from taxes between 1919 and 1923? Unemployment and failing factories C. What did the government do in response to lower incomes? Printed more money. In 1923 they had 300 paper mills and 2000 printing shops

4. Inflation D. Draw a diagram to show the ‘vicious circle’ of inlfation Prices rose – money was printed – prices rose E. Give an example of hyperinflation Loaf of bread 1919 – 1 mark 1922 – 200 marks 1923 – 100,000 million marks

5. Results of hyperinflation Farmers Profit from rising food prices Still had to pay high prices for goods Some businesses Could pay off loans at lower value Could buy small, failing businesses cheaply People with savings Money in bank accounts, insurance policies or pensions – savings became worthless Everyone Shortages 1918 – £1 = 20marks, £1 = 20 billion marks No imports Difficult to buy what is needed Had to carry money in baskets/wheelbarrows Had to rush out to buy things before prices went up

6. Solving the problems A. How were the problems of hyperinflation fixed? Stresemann issued a new currency – the Rentenmark, in November 1923 B. What were the long-term problems of hyperinflation? Many Germans had suffered and blamed the Weimar republic The middle classes should have been the main support but were seriously damaged by economic problems

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