Too Much Money Viewing Guide Key

Too Much Money Viewing Guide Key

  1. Inflation is when government creates too much money.
  2. When government creates too much money, its purchasing power goes down.
  3. You get credit based on how much you earn and your ability to pay back what you borrow.
  4. Government can spend a lot of money because it can print a lot of money.
  5. In 1777, Congress was desperate for money to wage the war.
  6. Prices at Valley Forge were 480% higher than they were at the beginning of the war.
  7. From 1500 to 1800, the Spanish Conquistadors carted 70% of the world’s gold and 85% of its silver back to Spain.
  8. Too much gold and silver created the same problems as too many Continentals.
  9. During the Century of Gold, the supply of money increased dramatically, and the value of money (gold and silver) went down.
  10. After World War I, the Allies presented the German government with a bill for 132 billion marks.
  11. Five years after World War I ended, one dollar would buy 4.2 trillion marks.
  12. By 1930, all that crazy, out-of-control printing of money had destroyed the economy of Germany.
  13. In Bolivia in 1985, prices were soaring at an annual rate of 50,000%.
  14. A 2-liter bottle of cola that sold for five Bolivian pesos ended up selling for 40 to 50 million Bolivian pesos.
  15. Paper money was plunging so fast in value that people would rush to convert it into anything of stable value.
  16. Inflation was happening so fast that people didn’t know how to support their families.
  17. Bad economic policy has destroyed the livelihood of millions of people around the world.
  18. Hyperinflation happened in Bolivia in the 1980s; it happened in Germany in the 1920s; and it happened in America in the 1700s.
  19. Inflation causes rising prices, not the other way around.
  20. List three things governments buy on credit. A) B) C)
  21. Why wouldn’t American farmers sell food to George Washington’s Continental Army during the Revolutionary War?
  22. When the British spread counterfeit Continentals around the American colonies, how was this “inflation as an act of war”?
  23. What is the difference between the Continental Congress printing Continentals and the British printing them? Do their intentions matter? Explain.
  24. How might inflation change our pattern of savings or affect the risks people take when they decide to save or invest their money?
Too Much Money Viewing Guide - KEY