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Lecture 2 - Inflation

Lecture 2 - Inflation - Inflation Inflation was going on...

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Inflation - Inflation was going on everywhere; especially high in European countries - Hyperinflation took place in Germany, Russia and Hungary - Germany was required t pay reparations (a debt incurred from starting the war) - Hyperinflation in Germany allowed Hitler to gain power - Hyperinflation: a drastic change in prices which cause inflation to rise significantly in one year Wholesale Price Index - Germany Year Price 1914 1.25 1918 2.45 1919 8.3 1922 (January) 70.3 (December) 1475 1923 (January) 19,835 (August) 944,000 (September) 23.9 million (October) 7.1 billion (November) 726 billion (December) 1.3 trillion - The government had to make wage and price controls helped Germany, but once the war was over, inflation took over - Creditors were hiding because they didn’t want to be paid in worthless money - Hyperinflation eventually did end, but it did have long-term effects on Germany - The middle class was almost completely wiped out because of the drastic change Causes of Hyperinflation 1. Budget Deficits
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Lecture 2 - Inflation - Inflation Inflation was going on...

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