Question

Select the statements which are true regarding the post First World War situation in Germany.

• A. Germany witnessed deflation.
• B. It caused political instability in Germany.
• C. Treaty of Versailles was severe on Germany.
• D. Printing money solved issues of Germany.

Answer 1

Answer: (B), (C)

Treaty of Versailles was severe on Germany.

Germany printed money to pay the debts imposed by the Treaty of Versailles after the First World War. More money in circulation increased the prices of the products sold. Suppliers increased the prices of products as the demand increased assuming that the people would buy the goods anyway. This persistent rise in price is called inflation. The inflation went so high in Germany that people carried money in carts to buy a loaf of bread.