Principles of Economics: German Hyperinflation (1921–1923)

A collection of vocabulary flashcards related to key concepts surrounding German Hyperinflation.

Hyperinflation

Extremely high inflation, typically exceeding 50% per month, where money loses value almost daily.

Inflation

A sustained increase in the general price level of goods and services in an economy.

Rentenmark

New currency introduced in November 1923 to replace the worthless paper mark, backed by land and industrial bonds.

Reichsmark

Currency that replaced the Rentenmark in August 1924, backed by gold reserves.

Principle 10 of Economics

States that prices rise when the government prints too much money.

Government Printing

The act of a government increasing the money supply, often leading to inflation.

Purchasing Power

The value of money measured by the quantity of goods it can buy.

Exchange Rate

The value of one currency compared to another, significantly affected by inflation.

Treasury Bills

Government debt securities issued to finance deficits, often purchased by central banks.

Economic Calculation

The determination of the production and allocation of goods in an economy.

Vicious Cycle

A complex chain of events caused by a negative feedback loop, such as increasing money supply leading to depreciation.

CPI (Consumer Price Index)

An index measuring the average change over time in the prices paid by consumers for goods and services.

PPI (Producer Price Index)

An index that measures the average change over time in the selling prices received by domestic producers.

Reparations

Payments made by Germany post-WWI as compensation for war damages, playing a role in hyperinflation.

Barter Economy

An economic system where goods and services are traded directly for other goods and services without money.

Social Instability

A state of societal unrest typically arising from economic crises like hyperinflation.

Deficit Monetization

The process of financing government expenditures by printing more money.

Dawes Plan

A plan that restructured Germany's reparations payments and provided a loan to stabilize the economy.

Weimar Republic

The democratic government in Germany from 1919 to 1933, often associated with economic instability.

Exponential Growth

A rapid increase in the money supply, often associated with hyperinflation.

Flight from the Mark

The tendency of individuals to convert marks to foreign currencies due to lack of trust in the mark.

Psychological Damage

The mental and emotional effects on individuals and society resulting from economic crises.

Fixed Exchange Rate

A currency value that is tied to another currency or a basket of currencies.

Serially Printed Money

Currency produced in massive quantities, often leading to devaluation.

Historical Context

The background and conditions surrounding the events of German Hyperinflation from 1921 to 1923.

Economic Foundations

Basic principles that underlie economic theories and practices.

Central Bank Independence

The degree to which a country's central bank operates without direct political pressure.