At the end of World War I, the Allied powers-the United States, the United Kingdom, France, and Italy-insisted that the German government make payments, called
At the end of World War I, the Allied powers-the United States, the United Kingdom, France, and Italy-insisted that the German government make payments, called reparations, to the Allied governments to pay for the damage Germany had caused during the war. In 1919, the British economist John Maynard Keynes wrote the influential book The Economic Consequences of the Peace, in which he argued that the reparations for World War I that Germany was being forced to pay to the Allies would have devastating consequences, including political unrest, because the German government would struggle to find the funds to make the payments. As mentioned in the chapter, during the 1920s Germany experienced a hyperinflation. Was there likely a connection between the war reparations that Germany was forced to pay and the hyperinflation? O A. Yes, Germany printed large amounts of money to pay the reparations, resulting in a collapse in the purchasing power of its currency. O B. Yes, Germany was forced to borrow large sums of money from its allies, causing the purchasing power of its currency to rise too quickly. O C. No, it helped stabilize the value of the German currency, which helped slow the growth of the hyperinflation that had begun during the war. O D. No, despite Keynes's claims, no connection can be found between the war reparations and the German hyperinflation. Which of the following consequences of hyperinflation would be least likely to lead to political unrest? O A. An economy may resort to barter, in which case, specialization and productivity may be reduced. O B. The purchasing power of money may rise so rapidly that it creates a shortage of goods. O C. Workers may abandon their jobs because the wages they are paid have no purchasing power. O D. Prices may rise so rapidly that money loses most of its value before it can be spent
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