Question

What is hyperinflation? How this situation occur in
Germany and affect the image of Weimar Republic?

Answer 1

Answer:

Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy.

✓ Hyperinflation is a term to describe rapid, excessive, and out-of-control price increases in an economy, typically at rates exceeding 50% each month over time.

✓ Hyperinflation can occur in times of war and economic turmoil in the underlying production economy, in conjunction with a central bank printing an excessive amount of money.

✓ Hyperinflation can cause a surge in prices for basic goods—such as food and fuel—as they become scarce.

✓ While hyperinflations are typically rare, once they begin they can spiral out of control.

Explanation:

Hyperinflation occur in Germany and affect the image of Weimar Republic as:-

✓ Germany was already suffering from high levels of inflation due to the effects of the war and the increasing government debt.

✓ ‘Passive resistance’ meant that whilst the workers were on strike fewer industrial goods were being produced, which weakened the economy still further.

✓ 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.

✓ By autumn 1923 it cost more to print a note than the note was worth.

✓ During the crisis, workers were often paid twice per day because prices rose so fast their wages were virtually worthless by lunchtime.