ECO 120 Study Guide - Final Guide: Money Supply
Document Summary
This question is interesting because balderston goes about answering the question differently than his predecessors- trying to compare the financial setup and abilities of britain and germany and disprove the notion that german. Hyper- inflation was a result of their war spending policies and debt reliance instead of taxation but rather through the market"s inability to absorb the debt. Inflation o inflation = growth rate in money supply - growth rate in gdp. Hyper inflation: hyper inflation= prices doubling over the course of 3 years, german hyper inflation= prices increasing 1% per hour. Comparing britain and germany: balderston estimate. Britain met 26. 2% of war expenditures with taxation. Germany met 8. 2% of war expenditures with taxation. Incomparable: german and british government extremely different. British= centralized, taxes raised at federal level. After taking this into account: o o o. Germany financed 16. 7% of war expenditures with taxation.
