In 1923, Germany experienced a very severe inflation. As prices in Germany rose, the demand in the foreign exchange market for U.S. dollars:

Question

Quizplus · Accepted Answer

During the severe inflation in Germany in 1923, the value of the German mark plummeted, causing Germans to need more of their currency to buy foreign goods, including those priced in U.S. dollars. This increased the demand for U.S. dollars in the foreign exchange market. At the same time, the supply of U.S. dollars fell because fewer people wanted to exchange their stable dollars for rapidly depreciating German marks. This combination of increased demand and decreased supply for U.S. dollars led to an increase in their value relative to the German mark.

In 1923, Germany Experienced a Very Severe Inflation