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.

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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 .

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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

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Instruction Boom and Bust

? Lesson How did economic problems silence the "roar" of the Roaring Question Twenties?

Slide

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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 .

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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.

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