NAME ______________________________________ DATE _______________ CLASS _________
Economics of History Activity netw rks
Conflict and Absolutism in Europe
Inflation in Sixteenth Century
Economics Terms to Know
Europe
During the sixteenth century, Europe's population inflation when prices generally
began to grow rapidly, which caused an increased go up
demand for goods, food, and land. Prices of this
supply amount of a product offered
merchandise also began to rise, and the normally
for sale at all possible prices in a
stable economy of Europe began to experience
market
inflation.
demand combination of desire,
Inflation is the general rise in prices, and it can ability, and willingness to buy a
have many causes. Many modern historians believe product
the rise in population created too great a demand
for a limited supply. However, economists of the
sixteenth and seventeenth centuries thought that the inflation was caused
by so many precious metals being brought over from the New World. The
thinking was that the more money there was, the less it was worth, and
the less it would buy.
Whatever the actual cause—and it was most likely a combination of factors—
the rate of inflation at the time was not as dramatic as what we are used to
today. Estimates show that prices increased at a rate of about 3 percent per
year. The annual inflation rate in the United States in 2009 was -0.3.
Because sixteenth-century Europeans had been used to a very stable
economy for so long, people felt the change.
The effects took a wide range of forms. Generally during inflation, prices tend
to rise more quickly than wages do. Workers were able to buy less and less,
and their standard of living dropped. But not everyone suffered from the
inflation. Landowners, for example, were able to charge higher rents to make
up for the price differences.
People who were producing food and goods also profited from the rising
prices. Not only were they paying their workers less, they were also selling
to an expanding marketplace—more and more people who needed their
goods. Some historians believe that in this way, inflation was actually a great
stimulus to Europe's economy.
Applying Economics to History
1. Drawing Conclusions Europe's inflation may have been caused in
part by large amounts of precious metals coming in from the New
World. Even though money was worth less during the period of
inflation, what do you think happened to its value as the economy
improved?
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NAME ______________________________________ DATE _______________ CLASS _________
Economics of History Activity Cont. netw rks
Conflict and Absolutism in Europe
2. Analyzing Who was hit hardest by Europe's inflation in the sixteenth
century? Why?
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3. Identifying Central Issues What do historians believe were two
possible causes of the inflation?
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4. Making Inferences What might have helped Europe avoid inflation?
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