USA HISTORY

AMERICAN IMPERIALISM(1890 1919)

TREATY OF VERSAILLES

[SOURCES]
What was a massive problem in Germany in the aftermath of WWI?

(A) ** Uncontrollable inflation

(B) Military spending

(C) trade surpluses

(D) Industrial Pollution

EXPLANATIONS BELOW

Concept note-1: -In order to pay the striking workers the government simply printed more money. This flood of money led to hyperinflation as the more money was printed, the more prices rose. Prices ran out of control, for example a loaf of bread, which cost 250 marks in January 1923, had risen to 200, 000 million marks in November 1923.

Concept note-2: -The most widely studied hyperinflation occurred in Germany after World War I. The ratio of the German price index in November 1923 to the price index in August 1922-just fifteen months earlier-was 1.02 × 1010. This huge number amounts to a monthly inflation rate of 322 percent.

Concept note-3: -The more money that the government printed, the more the money became worthless. This meant that, when other countries exchanged their money to Reichsmarks, it wasn’t worth anything. As a result, imports to Germany fell and the shortages became worse. Germany could not import the goods it needed for survival.

Concept note-4: -When the war ended, government agencies removed their controls on the economy. This released pent up demand. People raced to buy goods that had been rationed, while businesses rapidly raised prices they had been forced to keep low during the war. The result was rapid inflation.