Causes of the Depression: Overproduction Flashcards
Where were the earlier signs of occurrence of an economic crisis were manifested?
In the agricultural sector as farmers produced more as a result of technological innovations in agriculture.
What were higher productions followed by ?
A decline in prices as the supply and demand chain destabilized.
What did farmers continue to do as prices dropped?
Produce more. This forced them to become loan defaulters that led to banks’ closure. The situation worsened by the Dustbowl which even devastated the farmers more.
What did overproduction in companies result in?
Flooding the market that overwhelmed the people who purchased them.
What did instalment buying cause people to do?
It caused people to impulse buy without the money to repay. There was overproduction and consumption was low and profits turned into losses while debts increased. This kicked many firms out of operation.
What could overproduction have resulted from?
- Poor management strategies,
- Company holdings
- False financial reports from companies so as to alleviate the stock price.
