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1.a) The policies of the Second Reich during the war initiated economical problems within Germany that later led to hyperinflation. To cover the cost of the war the German government relied heavily upon borrowing and printing money. It did this in anticipation of winning the war and claiming compensation from the defeated countries. It built up huge debts as the money they were printing quickly became greater than the value of their assets, which deemed …

…welfare payments. Their economic policies were initially popular amongst the people as they avoided increased taxes. Profits appeared to increase which meant there was continuing investment. Employers were able to pay increased money wages from increased prices and a combination of these factors led to a growth within economy. On the surface inflation was reducing the real burden of internal debt that consisted of interest and debt repayments on money borrowed from the German citizens.