1. What industrial weakness signaled a declining economy in the 1920s?
Many industries that had been booming throughout the twenties were now beginning to diminish, such as steel, oil, cars, consumer goods, lumber, and mining. The lower rate of new houses being built was an indicator of other industries related to it being about to be hit hard.
Many industries that had been booming throughout the twenties were now beginning to diminish, such as steel, oil, cars, consumer goods, lumber, and mining. The lower rate of new houses being built was an indicator of other industries related to it being about to be hit hard.
2. What did the experience of farmers and consumers at this time suggest about the health of the economy?
Farmers at this time had built up tons of debt from large loans on equipment and land taken out during WWI, so they had no money to spend on goods. Other consumers at this time had built up debt from “buy now, pay later” plans, in which companies created an installment plan with interest. People got many items but were not able to pay for them. As a result, everybody was in debt except the business owners offering the credit, heavily weakening the economy as nobody was able to buy anything anymore.
Farmers at this time had built up tons of debt from large loans on equipment and land taken out during WWI, so they had no money to spend on goods. Other consumers at this time had built up debt from “buy now, pay later” plans, in which companies created an installment plan with interest. People got many items but were not able to pay for them. As a result, everybody was in debt except the business owners offering the credit, heavily weakening the economy as nobody was able to buy anything anymore.
3. How did speculation and margin buying cause stock prices to rise?
Speculation, buying stocks looking for a quick profit, and margin buying, buying a little bit of stock and borrowing for the rest, made stock easily available to everyday people. This led more people to buy stock which in turn led to a huge upward spiral in the stock market.
4. What happened to ordinary workers during the Great Depression?
Many ordinary workers were fired during the Great Depression. By 1933, the unemployment rate was 25%. The 3 out of 4 workers who did keep their jobs faced worse conditions for less money and less benefits. Basically, ordinary workers either lost their jobs or lost wages, either way they didn’t have enough money.
Speculation, buying stocks looking for a quick profit, and margin buying, buying a little bit of stock and borrowing for the rest, made stock easily available to everyday people. This led more people to buy stock which in turn led to a huge upward spiral in the stock market.
4. What happened to ordinary workers during the Great Depression?
Many ordinary workers were fired during the Great Depression. By 1933, the unemployment rate was 25%. The 3 out of 4 workers who did keep their jobs faced worse conditions for less money and less benefits. Basically, ordinary workers either lost their jobs or lost wages, either way they didn’t have enough money.
5. How did the Great Depression affect the world economy?
During the Great Depression many European were recovering from damages during World War I, and the economic downturn in America did not help. America was no longer able to import European goods, in part because of the lack of money, and in part because of the huge tariffs. However, now no countries had any American dollars so America was not able to export anything. World trade was hurt heavily by these tariffs.
Define:
a. Price-Supports: The government would buy food from farmers at a guaranteed price and sell them on the world market.
b. Credit: Consumers could buy now and pay later for products.
c. Dow Jones Industrial Average: A barometer for the health of the stock market based on the stock prices of 30 major companies.
d. Speculation: Buying stocks to make a quick profit with no regards for the risk.
e. Buying on Margin: Paying a small price for stocks and borrowing the rest of the necessary money.
f. Black Tuesday: October 29, people tried to sell as many stocks as possible before the prices of stocks dropped even more.
g. Hawley-Smoot Tariff: An extremely high protective tariff intended to protect American companies but ended up hurting them.
During the Great Depression many European were recovering from damages during World War I, and the economic downturn in America did not help. America was no longer able to import European goods, in part because of the lack of money, and in part because of the huge tariffs. However, now no countries had any American dollars so America was not able to export anything. World trade was hurt heavily by these tariffs.
Define:
a. Price-Supports: The government would buy food from farmers at a guaranteed price and sell them on the world market.
b. Credit: Consumers could buy now and pay later for products.
c. Dow Jones Industrial Average: A barometer for the health of the stock market based on the stock prices of 30 major companies.
d. Speculation: Buying stocks to make a quick profit with no regards for the risk.
e. Buying on Margin: Paying a small price for stocks and borrowing the rest of the necessary money.
f. Black Tuesday: October 29, people tried to sell as many stocks as possible before the prices of stocks dropped even more.
g. Hawley-Smoot Tariff: An extremely high protective tariff intended to protect American companies but ended up hurting them.
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