Economy

Question 1

State the cause

The Great Depressionn (1929)

stocks

Answer 1

• Risky Investments: Buying stocks “on margin” fueled speculation and inflated share prices beyond companies’ actual value.
• Loss of Confidence: When confidence dropped, investors panicked and sold shares en masse, crashing the market.
• Bank Vulnerability: Banks heavily invested in the market, so bank runs triggered by the crash caused widespread bank failures.

Question 2

State the impact

The Great Depressionn (1929)

no money everywhere

Answer 2

• Credit Crunch: Businesses couldn’t get loans, hindering their ability to operate and pay workers.
• Business Failures: Lack of capital and credit led to widespread business closures and unemployment.
• Deepening Depression: The economic downturn spiraled as businesses failed and people lost jobs.

Question 3

Circular flow of income

examples of things where income of households go to

Answer 3

• Firms: Expenditure on goods an services (Buying what companies are offering)

Leakage:
* Taxes
* Savings
* Imports

Injections
* Government spending
* Investments
* Exports

Question 4

Circular flow of income

examples of things where income of firms (businesses) go to

Answer 4

• Goods and services: Using the money earned from selling to create more to sell
• Rent, Wages, Interest, and Profit: Usually these goes to the employess that work under the firms

Question 5

Define

Inflation

Answer 5

• The rate at which prices rise over a certain amount of time

inflation shows how much more expensive a set of goods and/or services has become over a certain amount of time, usually a year.

Question 6

Define

Recession

Answer 6

a downward trend in the business cycle, one that is characterized by a delcline in production and employment.

This trend lowers household income and spending, which consequantly causes many businesses and households to delay making large investments or purchase.

Question 7

Find the Causes

Inflation

Answer 7

Inflation reduces te value of money, leading to some results:

• Rising Cost of Living: Peoples money basically lose power in Inflation, so they would then have to choose wisely on spending more of teir money on needs first.
• Impact on Prices: Businesses need to pay more for production cost, so to keep their profit margine the same, they aise prices of goods.
• Currency Devaluation and Economic Impact: A weaker currency makes it more expensive to import goods and services, This can make some items less available on the domestic market.