Ch 22-4 The Economy of the 1920's - Sheet1 Flashcards
What economic problems threatened the economic boom of the 1920’s?
People were overspending through installment buying and buying stocks on margin.
What factors caused an increase in consumer spending?
lower prices, higher incomes, installment buying, and advertising
How might the practice of buying stock on margin turn a small drop into a larger and more prolonged decline?
Everyone may become desperate to sell, which would lower prices further.
Why were so many investors willing to take out loans on stocks?
Since the market continued to rise, many investors didn’t have problems paying back the loans.
Did everyone benefit from 1920’s prosperity?
No, farmers and workers had hard times.
Why did rising stock prices encourage people to gamble on the stock market?
They thought it was a quick way to make an easy profit.
Why might bad times for farmers also be bad for the American economy in general?
The US economy depended heavily on the success of agriculture.
Why were farmers left out of the prosperity of the 1920’s?
They struggled because of over production high debt and a decline in foreign demand following the war.
Among what groups was Hoover strong?
Hoover was strong with Protestants and rural residents.
What were reasons the economy, after a short slump, boomed following WWI?
Companies successsfully switched from producing military goods to consumer goods; high tariffs on imported goods and low taxes stimulated the domestic economy.
Explain how high tariffs and low taxes boosted the economy during the 1920’s.
High tariffs kept out foreign goods, allowing domestic companies to make goods and employ thousands of workers. Low taxes allowed people to keep and spend more of their money, which helped build businesses.
Why might some farmers have felt government support was necessary at this time?
Many farmers might have wanted support because many nations were too poor to buy their products.
