The Boom and the Bust

Question 1

give two statistics that show how regional differences made people miss out on the economic boom

Answer 1

60% of the population lived below the poverty line
-1929 avg income in South East it was approx 1/3 of northerners

Question 2

give a statistic that shows how women missed out on the economic boom

Answer 2

by 1930 only 150 female dentists and 100 female accountants and 700,000 women in domestic service jobs

Question 3

give a statistic that shows how AA missed out on the economic boom

Answer 3

85% of AA still lived in the poorest region the south

Question 4

give 2 facts that show how farmers/ agriculture missed out on the economic boom

Answer 4

wheat prices fell from $2.50 a bushel to $1
greater use of tractors meant fewer animals were needed and dec demand for animal feed; too productive and overproduced which brought prices down and could not sell abroad due to high tariffs

Question 5

what were the 7 causes of the economic boom

Answer 5

WW1
republicans policies
consumerism
car industry
technological change
credit
confidence

Question 6

give two stats that show how WW1 caused the economic boom

Answer 6

-trade with allies during the war was worth $3.2 billion by 1916
-by 1920 the USA produced and consumed 70% of the worlds oil and was a leading producer of coal and steel

Question 7

explain how WW1 caused the economic boom

Answer 7

war profits / trade with allies boosted economy, allowed for businesses to expand and increased demand meant increased productivity and efficiency and competition , also helped farmers

Question 8

give two stats that show how republican policies caused the 1920s economic boom

Answer 8

-taxes kept low (below 20%) and Mellon handed out tax reductions totalling to $3.5billion
-high tariffs protectionism for economy eg Fordney McCumber Tariff Act 1922

Question 9

explain how republicans policies caused the economic boom (3)

Answer 9

-laissez faire allowed quick and unstable growth of economy
-low taxes meant more money to put back into economy led to business expansion and more efficient production
-high tariffs ensured US products were more desirable for public than expensive foreign products however this disadvantaged farmers

Question 10

give 3 stats that show how consumerism caused the economic boom

Answer 10

-1927 2/3s of US households had electricity led to widespread use of electrical goods
-1923-1929 avg wage rise by 8%
-companies spent $3 billion annually in advertising which became a big industry

Question 11

explain his consumerism caused the economic boom

Answer 11

-inc use of electrical goods created economic growth and a stimulated industry
-wage rises allowed for more consumerism which put money back into economy to pay workers high wages

Question 12

give 3 stats that show how the car industry caused economic boom

Answer 12

-conveyor belt invented 1913 inc productivity
-4.5 million cars on the road by 1930
-knock on effect for other industries eg 90% of petrol, 80% of rubber prod in US was for car industry

Question 13

explain how the car industry caused the economic boom

Answer 13

growth of industry meant more jobs, affordability of cars meant more demand for car related services eg repairs and fuel
ripple effect on other industries and provide competition for trains

Question 14

give 2 stats that show how technological change caused the economic boom

Answer 14

-conveyor belt invented 1913
- new inventions eg radio, washing machine and vaccine cleaner

Question 15

explain how technological change caused the economic boom

Answer 15

-conveyor belt meant more efficiency and productivity and less skilled workers could be hired for cheaper
-new innovations increased consumerism and new material created more industries and jobs

Question 16

give 2 stats that explain how credit caused the economic boom

Answer 16

-development of Hire purchase made it easier for people to buy things on credit eg instalments
-by 1929 $7 billion worth of goods bought on credit

Question 17

explain how credit caused the economic boom

Answer 17

-hire purchase allowed more people to buy and put money into the economy also let people buy more expensive things

Question 18

give 3 stats that show how confidence caused the economic boom

Answer 18

-confidence rose as many believed they could make quick money on the stock market
-by 1929 1.1billion
-25 million Americans involved in buying and selling shares

Question 19

explain how confidence caused the economic boom

Answer 19

higher wages meant more ppl wanted to spend instead of save and they spent more due to confidence in economy so more people willing to invest

Question 20

what were the three long term causes of the great depression

Answer 20

-inflated confidence in stocks and shares
-production slowed due to saturation of the market and couldn’t sell abroad bc high tariffs
- rise of unemployment meant people couldn’t pay back credit

Question 21

what were the four causes of the wall street crash

Answer 21

the banking system
over speculation
easy credit
loss of confidence

Question 22

give two probes of evidence showing how the banking system caused the wall street crash

Answer 22

-the out of date system allowed banks to regulate themselves without gov interference so they acted in the bankers interest not the nations eg gov set low interest rates which led to lots of borrowing
-local banks (30,000) were not apart if the centralised system

Question 23

explain how the baking system caused the economic downturn

Answer 23

-lack of gov intervention allowed banks to act recklessly with nations money for the bankers’ benefit
-local banks were not equipped to deal with problems which furthered the depression

Question 24

give evidence to why over speculation caused the economic downturn

Answer 24

stock values inc $60bil between 1925- 1929 due to normal people borrowing to buy stocks which increases the demand
however in 1928 companies sold less goods and profits fell so when stocks rose greed took over

Question 25

explain how over speculation caused the complicated downturn

Answer 25

-lack of regulation and many new greedy and inexperienced shareholders (20million US shareholders ) and people were desperate for prosperity provided by stocks and ignored warning signs
inflated stock value due to demand did not represent companies sucxess

Question 26

give evidence why easy credit caused the economic downturn

Answer 26

-many people bought shares in credit
-easy credit policies from Fed Reserve Board encouraged this
-75% of purchase price if shares were borrowed thus creating artificially high prices

Question 27

explain how easy credit caused the economic downturn

Answer 27

made it easier for ordinary and inexperienced people to buy shares using credit; the lack of regulation from the Fed Reserve Board allowed this
resulted in unstable and artificially high stocks

Question 28

give evidence showing how loss of confidence caused the economic downturn

Answer 28

Autumn 1929 experts began to sell heavily before they lost value which sent small investors into a panic and also sold which led to a complete collapse
also rumours that Fed Reserve Banks were about to tighten credit facilities and make it harder to borrow

Question 29

explain how loss of confidence caused the economic downturn

Answer 29

encourages everyone to sell quickly and rumours about fed reserve bank encourages this

Question 30

give 5 causes if the depression

Answer 30

-over saturated markets
-over production in agriculture
-too many small banks
-over speculation on stock markets
-wall street crash 1929

Question 31

give 3 effects if the depression

Answer 31

-18 million unemployed by 1932
-industrial production dropped 45% between 1929 and 1932
-1929-1932 5000 banks went out of business
-collapse of credit