BP4- Economy

Question 1

Impact of post ww1 on farming.

Answer 1

During the war, farmers were urged to produce more wheat and were given subsidies to do so.
Some took out loans to buy farmland and machinery.
During the war, wheat farmers made a profit but after the war, they had produced too much and so therefore prices fell.
Some farmers produced yet more to cover their loans.

Question 2

Impact of post ww1 on industry.

Answer 2

There were many strikes in 1919 and 1920.
Most failed to get better working conditions and the strikes caused businesses to fail which increased unemployment.
Older industries such as the coal industry were in decline.

Question 3

What was the gov reaction to the post ww1 depression?

Answer 3

-The republican government at the time believed in laissez-faire and did not try to stop the depression.
-Other countries followed America and also introduced isolationist tariffs and this meant US exports fell.
-The government thought the depression would fix itself.
-This somewhat did occur but played a massive factor in the next Depression before WW2.

Question 4

Why was there a boom in the 1920s?

Answer 4

The USA came out of its post-war depression and hit a boom cycle.

Question 5

How did mass production produce the 1920s boom?

Answer 5

The mass production technique of breaking down manufacturing into a series of steps was developed before the war such as Henry Ford’s cars.
Ford streamlined production and only produced black cars which lowered the price.
Mass-produced goods were produced more quickly and cheaply so more people could afford them.
1917- 4.7 million passenger cars and by 1929 there were 23 million.
Everything needed places for them to be sold which increased employment too.

Question 6

What were the new management techniques used by businesses during the 1920s boom?

Answer 6

Some employers (such as Ford) used management ideas to make the production line more effective.
Each task was broken down into a series of movements and the worker was trained in the best way to complete the task.
This technique paid good wages and created good working conditions.

Question 7

How did hire purchase contribute to the 1920s economic boom?

Answer 7

Companies pushed hire purchase as the practical way to buy.
They sent out catalogues.
A sense of prosperity rose, people bought houses on mortgages etc.
Banks were more willing to lend.
-Companies pushed hire purchase as the practical way ti buy.
-They sent out catalogues.
-A sense of prosperity rose, people bought houses on mortgages etc.
-Banks were more willing to lend.
-Meant that people consumed more because they felt that as they were not paying the full price they could continue spending. This led to an increase in consumer debt and created an unsustainable lifestyle.
-Between 1920 and 1929, consumer debt rose from $3.3 billion to $7.6 billion.

Question 8

Problems with hire purchase and loans 1920s boom.

Answer 8

Meant that people consumed more because they felt that as they were not paying the full price they could continue spending. This led to an increase in consumer debt and created an unsustainable lifestyle.

Question 9

Consumer debt in 1920 and 1929.

Answer 9

consumer debt rose from $3.3 billion to $7.6 billion.

Question 10

How did changing industries contribute to the 1920s economic boom?

Answer 10

New industries were more efficient and used a higher level of mechanisation.
Older industries such as textile and manufacturing became less important than newer industries.

Question 11

Context of the wall street crash.

Answer 11

Share prices rose rapidly and so the media began to point out it was possible to make money if you bought shares and sold them later.
Ordinary people began to buy shares and this created a bull market.
People bought shares, they increased in price and then they sold them again to make a profit.
People began to borrow money to buy shares.
Banks began to use customers’ investments to trade in shares.
The government did nothing to stop this.
Stock prices began to fall and the media began to talk of a crash.
People rushed to sell and a bear market was created.

Question 12

What is a bull market?

Answer 12

when share prices rise and are expected to keep rising.

Question 13

What is ‘buying on the margin’?

Answer 13

When people borrow money to buy shares.

Question 14

What happened when the stock market went bust?

Answer 14

The boom cycle stopped when the stock market collapsed.
Most people who could afford consumer goods had bought them and so demand was increasing and companies had failed to cut production so goods piled up in warehouses.
Umeployment rose so employers cut working hours and wages.

Question 15

What did the government do when the stock market crashed?

Answer 15

Nothing- they had a laissez-faire attitude.

Question 16

When did the stock exchange close.

Answer 16

29th October 1929.

Question 17

What did thr wall street crash lead to?

Answer 17

The great depression.

Question 18

How did the depression impact americans.

Answer 18

As businesses and banks went bankrupt, unemployment shot up.
Many people lost their jobs and those who could not afford mortgages also lost their homes.
People stopped buying so businesses failed.
The outcome was homelessness and poverty.

Question 19

What did the government do to try to combat the great depression?

Answer 19

At first the government did nothing, Hoover eventually decided to push for federal action but Congress rejected this.
Some measures were put in place but not enough.

Question 20

How did Roosevelt revive the banks?

Answer 20

Roosevelt closed all of the banks and had FED officials inspect them before the healthy ones were reopened.
Passed the Glass-Steagall Banking Act. This separated investment banking from commercial banking so that money belonging to investors could no longer be used for speculative ventures on the stock market.

Question 21

How did Roosevelt restore public confidence after the wall street crash?

Answer 21

He gave fireside chats around what he was doing to restore the banking system which gave people a sense of security.

Question 22

How did Roosevelts new deal restore the economy?

Answer 22

He created employment using federal agencies and this helped to restore confidence.
Recovery was slow and bumpy and had a slight economic recession in 1938-9 but confidence remained.
The Federal Housing Administration oversaw slum clearance and the building of housing for low-income families.
The agricultural acts provided subsidies to farmers to produce less.

Question 23

How did the economy fully recover after the wall street crash and great depression?

Answer 23

When ww2 broke out the economy was revived.

Question 24

What happened to the demand for consumer goods after ww2?

Answer 24

It increased dramatically as people craved things they had done without in the war.

Question 25

How did the post war baby boom contribute to the post war economic boom?

Answer 25

There was a post-war baby boom which meant there was a growing demand for child-centred goods and foodstuffs.
1955-1965- Four million babies born each year.
More babies meant more toddlers and more teenagers to consume themselves.

Question 26

What was the governments reaction to post war strikes?

Answer 26

The government came down hard on strikes for higher ages as prices rose.
When coal miners went on strike, Truman took control of the mines.
Rail workers went on strike to support the miners. Truman took over the railways.
When railworkers walked out, he asked Congress to draft strikers into the army. They backed down and the number of strikes reduced.

Question 27

What did the post ww2 buisness boom mean?

Answer 27

Encouraged employers to expand their workforces and raise wages which encouraged more spending.

Question 28

What did Truman pass in 1946?

Answer 28

The employment act which set up a council of economic advisors to advise the president on the economy.

Question 29

How did the government control the economy after ww2?

Answer 29

It was careful to keep taxes low and put controls on the money supply to lower inflation.

Question 30

What growth in the 50s and 60s was an example of economic prosperity?

Answer 30

The growth of the surburbs.

Question 31

Which government act allowed for 41,000 miles of interstate highways to be built?

Answer 31

1956 Highways Act.

Question 32

What were the Levitt company?

Answer 32

The Levitt company specialised in mass-produced, pre-fabricated houses which were quick and cheap to build. This led to an increase in Levittowns.
One Levittown on Long Island had 17,000 homes for 82,000 residents.
Levitt refused to sell to black Americans.

Question 33

Explain the shift in industry in the 1950s.

Answer 33

There was a shift in industry from the North and East to the South and the West. Much of the shift was due to wartime investment for the war production industry e.g aircraft manufacture.
Land, goods and services were cheaper in the South and West and so after the war they remained here.
People retired there.
This contributed to the emptying of the inner cities and the problems that developed in them.
The government wanted to keep interest rates low so they increased the money supply thinking it would hold inflation down.

Question 34

What happened in the 1950s regarding technology?

Answer 34

The USA was losing its place in the country of technological innovation.
E.g Americans designed the first transistor radio but did not improve and miniaturise it. The Japanese did. US businesses had to buy the Japanese parts to assemble.

Question 35

What did the USA lose its place as in the 1960s?

Answer 35

Most important exporter.

Question 36

Which events drained the governments finances in the 1960s?

Answer 36

The vietnam war and social welfare payments.

Question 37

Explain why inflation occured in the 1960s.

Answer 37

The government was still increasing the money supply but inflation was still rising. Increasing the money supply was helping them to meet the increased welfare costs and other bills so in the short term it worked but the amount of gold held by the government kept falling so the balance between reserves and paper money was out of balance.

Question 38

What was Stagflation?

Answer 38

Previously, when businesses stopped expanding, wages stopped rising or even fell. So people spent less and prices fell.
During the 1970s, when businesses stopped expanding, prices did not fall and instead inflation carried on and prices increased.
Those who could afford to carry on spending continued and some were better off than others e.g people who had wages linked to the CPI. However, those on a fixed income found they could buy less and less.

Question 39

When did Stagflation occur?

Answer 39

1970s.

Question 40

How did the government respond to stagflation?

Answer 40

The government couldn’t cope with the economic problems.
Federal spending was very high due to social security payments and pensions.
The end of the war in Vietnam saved money that would have been spent on the war but soldiers added to the unemployment and drained social and medical benefits.
The government was too nervous of public reaction to control the economy.
Some people struggled to cope with credit card payments so they became homeless and dependent on government welfare.

Question 41

When were the two fuel crises of the 1970s.

Answer 41

1973 and 1979.

Question 42

Why did the 1973 fuel crisis occur?

Answer 42

Due to the Arab-israeli war, The Organisation of the Petroleum Exporting Countries (OPEC) supported Palestine and put the prices up by 70%. They embargoed oil exports to the USA and other countries supporting Israel.
Jan 1974, world oil prices were four times higher than before the crisis and never returned to their original levels.

Question 43

In jan 1974, fuel prices were how many times higher than before the crisis?

Answer 43

Four

Question 44

Impacts of the fuel crisis’ of the 1970s.

Answer 44

Lack of immediate access to cheap fuel was horrifying to car-dependent people.
-People as young as 15 years old could drive.
-Both crisis created discontent with the government as they felt that the government was making things worse.
-People changed their car-buying habits to smaller Japanese and European cars that used less fuel.
-a depression set in and unemployment rose.

Question 45

What was the ‘confidence crisis’?

Answer 45

In July 1979, President Carter addressed the nation and discussed the crisis the nation was facing. He said that it was a crisis of confidence. He was trying to reproduce Roosevelts fireside chats however Carter did not have Roosevelts way with the public and also had a history of failing to handle the economy.
The rising homelessness and unemployment reminded people of the Great Depression.
People decided to vote Republican.