(S1) Unit 8: The Great Depression

Question 1

Basic Investment Tips

Answer 1

• Research the market
• Pick companies you predict will make money
• Buy low, sell high
• Don’t put all your eggs in one basket

Question 2

Buying on the Margin

Answer 2

•Investor makes small down payment (10%)
•Stock broker covers the remainder of the balance
•If the investment fails, stock broker makes a margin call requesting full payment
-Many middle and working class investors could not make their margin calls, resulting in massive bankruptcies and bank failures

Question 3

Speculation

Answer 3

• Theories and predictions on the market

* In some major industries, such as oil, speculation determines the market price

Question 4

Black Tuesday

Answer 4

• Tuesday October 29, 1929
• Thousands of banks and brokers made margin calls
• 16 million shares of stocks were sold (Record which stood for 40 years)
• Stock market lost 35% of its’ volume
• Millions of people went bankrupt
• Thousands of banks failed
• Market finally reached September 1929 peak volume in November 1954

Question 5

Panic of 1929

Answer 5

…NMI

Question 6

Wall Street Crash

Answer 6

•Causes
-$8.5 billion loan debt (This amount was higher than the total U.S. currency in circulation at the time)
-Too much margin buying
•Banks and brokers gave too many bad loans to middle and working class investors
-Overproduction by industry and agriculture

Question 7

Business Cycle

Answer 7

…NMI

Question 8

Hoovervilles

Answer 8

…NMI

Question 9

Bonus Army

Answer 9

…NMI

Question 10

President Herbert Hoover

Answer 10

…NMI

Question 11

President Hoover’s Policies

Answer 11

• Asked labor leaders not to strike
• Encouraged business leaders not to lay off workers
• Supported high tariffs
• Began public works projects
• Never supported direct government intervention in business or direct government assistance to the unemployed and poor

Question 12

President Franklin Dlano Roosevelt

Answer 12

…NMI

Question 13

The New Deal

Answer 13

•FDR’s policies

- Direct assistance to the poor
- Immediate unemployment relief
- Major infrastructure projects
- Reduction of agricultural production
- Government regulation of banking and business transactions
- Deficit spending
- Social security
- Federal insurance for bank deposits

Question 14

Alphabet Soup

Answer 14

…NMI

Question 15

Fireside Chats

Answer 15

…NMI

Question 16

Welfare State and Deficit Spending

Answer 16

•Criticisms for the New Deal

- FDR was a socialist that destroyed the free enterprise system
- By using deficit spending, FDR was bankrupting the nation and creating a welfare state by making millions of Americans dependent upon the government
- FDR became too powerful and took away too much economic freedom from individuals and the market * Note, some actions by FDR were ruled unconstitutional by the supreme court

Question 17

Dust Bowl

Answer 17

…NMI

Question 18

Culture and the Arts

Answer 18

…NMI

Question 19

Depression Abroad

Answer 19

• Following the Wall Street Crash, Europe and Asia lost much of their trade with the U.S.
• As a result, world markets also crashed, with much of the world suffering from unemployment and poverty
• In some countries, socialist and communist political parties became popular

Question 20

Rise of Fascism

Answer 20

•In Italy, Germany and Japan, fascist government came to power during the 1920s and 1930s
•Fascism- The policy that a nation’s values, beliefs and ethnicity are superior to others
•Why and How?:
-People were desperate for order
-Unemployed nationalist blamed immigrants and foreigners for their economic problems
-People were concerned about the spread of communism from the Soviet Union