Chapter 6 Flashcards
1
Q
The Roaring 20s
A
- Mass production & consumer spending
- Peak of innovation with the development of radios & cars
- Low unemployment, high wages = lots of rich people
- More products than people could buy
- Usage of credit cards to purchase things
2
Q
Stock Market Crash
A
- France was out of the grain field business so the world turned to America for supplies, fueling the Roaring 20s
- France suddenly provided wheat again, causing the market to be overwhlemed and the pricing of grain crashing
- Rushed people into selling their stock
- The panic resulted caused banks to fail as too many people were attempting to withdraw money.
3
Q
The Great Depression
A
- Resulted from the effects of a free-market economic system
- ## Unemployment rates were off the charts and several businesses shut down
4
Q
Warren G. Harding
A
- 1921, Republican Harding became president
- Campaigned on a platformt that promised to return society to a “normal state.” (similar to Trumps: “Make america great again”)
- The three central ideas of his platform included:
1. Isolationism—a retreat from involvement in other countries’affairs, especially European countries
2. Nativism—the promotion of policies that favour the existing dominant culture in a country and reduce immigration
3. A reduction of government involvement in the lives of citizen
5
Q
First Red Scare
A
- Referred to the fear of communism, with the color red being associated with the Bolshevik Red Army of the Russian Revolution.
- Left-wing groups opposed American involvement in WWI.
- The Russian Revolution fueled public fears of a similar communist uprising in the US.
- Large labor strikes in 1919 and 1920 increased public perception of growing support for communism.
- Anarchist bombings, including one on Wall Street, fueled public sentiment against radical political movements and immigrants.
6
Q
Income Disparity
A
The difference in earnings between the rich and the poor
7
Q
Monopoly
A
the exclusive ownership or control of trade in aparticular good or service
- A monopoly is a market structure that consists of a single seller or producer and no close substitutes.
- A monopoly limits available alternatives for its product and creates barriers for competitors to enter the marketplace.
- Monopolies can lead to unfair consumer practices.
8
Q
Elkins Act & Hepburn Act
A
- Created by Theodore Roosevelt to prevent railroad companies from offering preferental treatment to their corporate customers.
9
Q
Taft and the Sherman Anti-Trust Act
A
- Taft was handpicked by Roosevelt to be his successor as president
- Persued the progressive intiatitives started by Roosevelt (breaking up trusts)
- The Sherman Anti-Trust Act was a piece of legislation to prevent monopolies and collusions (illegal/secret actions) from risking the state of competition.
- Protecting competition > Not allowing domination over the market
- A business entity wasn’t able to take control over two or more competiting businesses.
10
Q
Emergency Quota Act (1921)
A
- Implemented by Harding
- Reduced immigration by approximately 75 per cent
- Harding’s government attempted to preserve the existing ethnic composition of American society
11
Q
Calvin Coolidge
A
- Being vice president during the time Harding had died while still in office, Coolidge became Harding’s successor
- Coolidge favoured similar policies to those of Harding and continued to build upon the promises and acts already in place (isonationalism, immgration rates)
- Coolidge’s laissez-faire stance is reflected in the classical liberaleconomic policies of his administration
11
Q
Henry Ford
A
- Was an industrialist that helped fuel the economic prosperity and rates of consumerism
- Incorporated welfare capitalism into his business model
12
Q
Tariff
A
- A tax imposed by one country on the goods and services imported from another country.
13
Q
Economic Effects of the Stock Market Crash
A
- Majority of the population found themselves in major debts
- People and businesses went bankrupt
- Fear that the economy would only continue to go downhill
- Collapse of captialist economic systems
14
Q
Social effects due to the Great Depression
A
- Unemployment and poverty also led to greater social unrest.
- Strikes and protests became more common
- Left people to question the sustainability of classical liberalism, which later developed the modern understandings of liberalism.
15
Q
Government’s Response to the Great Depression
A
- Initially, there was a lack of government intervention
- Bennett was elected in 1930 and promoted projects that provided relief for the unemployed, but later on cut government spending believing that laissez-faire policie would eventually lead the economy out of the crisis
- Failure of implementing effective solutions caused Bennet to be replaced with MacKenzie King
- With King in office, more government involvement within the economy gave birth to social programs and modern approaches to a mixed economy
16
Q
Post-War Consensus and Economy
A
- In 1942, Sir William Beveridge presented a report titled “Social Insurance and Allied Service”
- ## Explained how the role of the government should expand to allow enhance the safety and security of citizens
- Universal Health care and pension plans were implemented (characteristics of a welfare state)
17
Q
Economic Crisis of the 1970’s
A
- Governments across the world were experiencing political issues in regards to withdrawals from establishments (Brentton Woods Agreement) and the 4th Arab-Israeli war.
- Decrease in production of oil = gas shortages & rationing
- The oil industry impacted the rest of the economy causing the prices of goods to rise.
- As a result, inflation rates increased causing the economy to slow down.
- Unemployment levels are high and weak demand challenged keynesian economics.
- Keynesian theory’s popularity waned then because it had no appropriate policy response for stagflation.
18
Q
Stagflation
A
- An economic phenomenon in which high inflation rates and a recession coexist at the same time
19
Q
Milton Friedman
A
- Believed that inflation was primarily the result of anexcess supply of money produced by central banks
- Supply of money increasing would cause consumer spending rates and demand to also rise, resulting in inflation (happened to Germany in 1920’s
- Believe there is a close and stable association between inflation and the money supply, mainly that inflation could be avoided with proper regulation of the monetary base’s growth rate.
- Felt that the amount of money issued by the central bank should be linked to economic indicators such as the rate of inflation
20
Q
Reaganomics
A
- Ronald Reagan became president of the United States in 1981 and was inspired by Friedman
- . At the time, supporters of Friedman and Hayek argued that stagflation was partly the result of huge national deficits from government spending
- To combat stagflation, Reagan wanted less government involvement and embarked on what was later called Reaganomics.
- Reduced income and business taxes, reduced regulation (controls on business), and increased government spending on the military
- These policies areknown as supply-side economics,or trickle-down economics.
21
Q
Monetarnism
A
The theory or practice explaining that the control of a country’s money supply is the best means to encourage economic growth and limitunemployment and inflation.
- The money supply is controlled throughthe regulation of interest rates
- Most heavily associated with Milton Friedman
