The US economy

Question 0

How was the unequal distribution of wealth a weakness of the American economy?

Answer 0

Half of Americans live below poverty line

Although USeconomy generating money; money was not going into the pockets of those who needed it most

Question 1

How was overproduction a weakness of the American economy?

Answer 1

Demand for one-buy items fell when everyone had got them

• factories produce fewer goods
• cut back on work forces
• fewer people afford consumer goods

Question 2

How was tariff policy a weakness of the American economy?

Answer 2

Tariffs protect US industry at home

• US businessmen sell goods, foreign gov set high tariffs on American goods
• -> US businessmen had difficulty selling goods abroad

Question 3

How was financial speculation a weakness of the American economy?

Answer 3

More shares bought in companies
‘On the margin’ - 10% of cost an borrowing remaining 90% banks
‘Bull market’ = more confidence and gambling
Gambling = speculation

Question 4

What year did share prices not rise as much as they had done in previous years

Answer 4

1928

Question 5

What did some experienced investors do when the share prices did not rise as high

Answer 5

They sold their shares before values fell

Question 6

What did the bull market turn into and what does this type of market mean?

Answer 6

A bear market.

This market was one where prices fall

Question 7

When was the Wall Street crash

Answer 7

Thursday 24 October 1929

Question 8

What was the Wall Street crash later called?

Answer 8

Black Thursday

Question 9

How many shares were sold on Black Thursday and what happened as a result of this

Answer 9

13 million

Nobody wanted to buy - prices divided

Question 10

How much did a group of bankers spend on buying the shares

Answer 10

$250 million

Question 11

Why did bankers put so much money into buying the shares after the crash and did this tactic work?

Answer 11

They hoped to encourage investors to buy rather than sell shares

Tactic worked - share prices stopped falling

Question 12

What day was there renewed panic about the shared and how many were sold on this day

Answer 12

Monday 28th October

9 million shares sold at falling prices

Question 13

How many shares were sold on Tuesday 29th October

Answer 13

16 million shares at whatever price they could get

Question 14

What was a result of the Tuesday 29th shares sold and how much did the shareholders lose

Answer 14

Prices of shared tumbled

Shareholders lost a total of $8 billion on this day alone

Question 15

What was the price of a Woolworths share on 3 September and 13th November?

Answer 15

3rd - $100

13th - $52

Question 16

What was the price of shares of General Electric on 3rd September and 13th November

Answer 16

3rd - $396

13th - $168

One of biggest falls

Question 17

When did the fall of share prices bottom out?

Answer 17

Mid November

Question 18

What was the effect of The crash on American confidence

Answer 18

Confidence in the American economy was destroyed

Question 19

What cycle did America fall into after the wall st crash?

Answer 19

The cycle of depression

Question 20

Describe the cycle of depression (4 points)

Answer 20

• reduced demand for consumer goods
• reduced production of consumer goods
• increased unemployment
• less money available to spend on consumer goods

Question 21

Why was there a ‘run’ on the banks

Answer 21

People lost confidence in banks, anticipated that they are now unstable and therefore wanted to withdraw all their savings

Question 22

How many banks collapsed in 1929 alone?

Answer 22

700 banks

Question 23

Why did banks particularly suffer in the crash?

Answer 23

Many banks had invested their customers money in shares

Question 24

How did banks attempt to recover some of their money

Answer 24

They began to call in loans from the companies and the ordinary people who had borrowed money from them

Question 25

Why did the banks not get the money people owed them when they asked?

Answer 25

Because the people did not have the money, they lost it when share prices fell

Question 26

What did companies who managed to stay open have to do?

Answer 26

Dismiss some of their workforce

Question 27

How many businesses closed down during the worst period of the Great Depression

Answer 27

100,000