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Germany And Its Economy Essay

934 words - 4 pages

Germany and its Economy

Known as the "fair" capital, Germany lies in the center of Europe and
in the center of the European home market. Approximately two thirds of
the top international fairs take place in Germany. Germany is
successful. A leader in world trade, Germany is the third largest
economy in the world and the biggest market in Europe. It wasn't
always this way though; European power struggles wounded the country
in two devastating World Wars in the first half of the 20th century
and left the country dominated by the victorious Allied powers of the
US, UK, France, and the Soviet Union in 1945.

Germany has been through all of the phases of the business cycle many
times. It even suffered immense depression after World War One in the
early 20th century. The Treaty of Versailles dug a deep hole in
Germany's economy because the Allies had gotten a little greedy with
their revenge. Payments made by Germany to the Allies represented a
drain of capital that would have otherwise been directed toward the
growth of German industry. In order to pay its debts for World War I,
Germany engaged in a huge "hyperinflation" of its currency, printing
paper marks until, in 1923, when they became worthless. The
destruction of the currency wiped out the people's savings, which
meant that there would be very little capital available within the
German economy for years to come. With Adolf Hitler rising to power in
1933, the German economy became increasingly socialized and
militarized, passing through recovery to prosperity, which scared
their foreign investors and made a healthy economic recovery
nonexistent.

Germany is referred to as a "social" market economy and remains a key
member of Europe's economic, political and defense organizations. Like
a free market economy, a social market is an economic system in which
the supply of and demand for goods and services are left to the
individual decisions of buyers and sellers. In addition to this, an
attempt is made to prevent restraints on competition resulting from
monopolies and cartels. Since Germany is a market economy, the three
economic questions are answered almost the same was as we in the
United Statesanswer them. The consumers of Germany answer the three
economic questions by what they buy and don't buy.

Given that Germany is known as a large exporting nation, many kinds of
goods are produced there. A large amount of what they export is made
up of vehicles, chemicals, machinery, metals & manufactures,
foodstuffs and textiles. They also have a large agricultural industry
with products such as potatoes, wheat, barley, sugar beets, fruit,
cabbages, cattle, pigs and poultry. Germany is also among the world's
largest and most technologically advanced produces of iron, steel,
coal, cement, chemicals, machinery, vehicles, machine tools,
electronics, food and beverages. They make an estimated 506 billion
dollars every year in exports and spend 472 billion on...

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