The Booming Economy - Edgenuity Inc.
Warm-Up Boom and Bust
The Booming Economy
In the 1920s, the economy appeared to be booming.
Consumers eagerly bought new products like appliances and cars. People also invested heavily in the stock market .
Appearances Can Be Deceiving
Despite all of this seeming prosperity, there were many economic
problems.
? Farmers were struggling. ? People were buying more than they could afford . ? Businesses were producing more than people could buy . The 1920s would end with the worst economic disaster in American
history.
? Edgenuity, Inc.
1
Warm-Up Boom and Bust
Lesson Objectives
By the end of this lesson, you should be able to:
? Understand the problem of
overproduction
and its role in
slowing American economic growth.
? Examine the effects of speculation and the extension of
credit on the American economy.
? Identify the economic factors that contributed to the
stock market crash of 1929 .
? Edgenuity, Inc.
2
Warm-Up Boom and Bust
W2K
Words to Know
Fill in this table as you work through the lesson. You may also use the glossary to
help you.
credit
the buying of something now but making payments on it until it is paid for
stock buying on margin
a share of a company that can be bought or sold
the buying of stock on credit
margin call
the settling of the cost of a stock
purchase bought on credit
speculation
an investment large profit
in the hope of making a
overvalued
the state of prices of stocks when they are much higher than they are actually worth
consumer confidence
a situation that occurs when people think the economy is in good shape
? Edgenuity, Inc.
3
Instruction Boom and Bust
? Lesson How did economic problems silence the "roar" of the Roaring Question Twenties?
Slide
2
Weaknesses in the Economy
The economy of the 1920s boomed , but it also had underlying
weaknesses , including:
? overproduction in manufacturing and agriculture. When there's
too much of something available, according to the law of supply and demand, prices begin to fall . ? overspending and buying on credit .
? Edgenuity, Inc.
4
Instruction Boom and Bust
Slide
2
Production in the 1920s
Consumers spent freely , embracing new products and
technologies.
? Consumers could buy new items that made life easier .
To meet the needs of consumers:
? manufacturers produced more goods less expensively. That meant Americans' spending went up .
? businesses offered credit and used advertising to increase and shape consumer demand .
? the government lowered income tax rates and reduced
the regulation of business.
? Edgenuity, Inc.
5
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