the great depression. causes of the depression overproduction in the 1920’s new technology and...
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The Great The Great DepressionDepression
Causes of the DepressionCauses of the Depression
Overproduction in the 1920’sOverproduction in the 1920’s New technology and agricultural changeNew technology and agricultural change Unequal distribution of wealth (no buying Unequal distribution of wealth (no buying
power)power) Easy Credit ( many people bought on credit)Easy Credit ( many people bought on credit) Speculation in the stock marketSpeculation in the stock market Tariffs (Smoot-Hawley)Tariffs (Smoot-Hawley) Restricted money supplyRestricted money supply
Causes of the Dust BowlCauses of the Dust Bowl
Soil Erosion (overproduction) Soil Erosion (overproduction) Poor irrigation practicesPoor irrigation practices DroughtDrought
Causes of the New DealCauses of the New Deal
Role of the government in economy Role of the government in economy increased significantlyincreased significantly
The New Deal was a series of programs The New Deal was a series of programs and agencies designed to provide the and agencies designed to provide the American people with American people with ReliefRelief Reform Reform recoveryrecovery
Consequences of the Consequences of the Great DepressionGreat Depression
PoliticalPolitical Blame HooverBlame Hoover FDR elected (rise of democrats)FDR elected (rise of democrats) Rise of totalitarian governments Rise of totalitarian governments
WWII on the horizonWWII on the horizon
EconomicEconomic Unemployment rising (all over world)Unemployment rising (all over world)
Social Development Social Development Wider gap between status groupsWider gap between status groups
Consequences of the Consequences of the Dust BowlDust Bowl
PoliticalPolitical Subsidies of farmersSubsidies of farmers
EconomicEconomic Loss of income, “penny auctions”Loss of income, “penny auctions”
Social DevelopmentSocial Development 2.5 million people move because the region 2.5 million people move because the region
could no longer support the peoplecould no longer support the people
Consequences of the New Consequences of the New DealDeal
Political Political Direct governmental control in industry growthDirect governmental control in industry growth
EconomicEconomic Increased government role in the nations economy Increased government role in the nations economy
Ex SEC- regulates the stock marketEx SEC- regulates the stock market
Social DevelopmentSocial Development Fears of socialism Fears of socialism
some nations turn to socialism some nations turn to socialism countries like the US and Great Britain made changes with countries like the US and Great Britain made changes with
capitalistic systemcapitalistic system
Significance of the Stock Significance of the Stock Market SpeculationMarket Speculation
““buying on margin” buying on margin” when stock market crashed people and when stock market crashed people and
businesses lost all they had invested businesses lost all they had invested and borrowed still owed their lendersand borrowed still owed their lenders
Reasons for Federal Reasons for Federal ReserveReserve
Controls the flow of currency and Controls the flow of currency and establishes interest ratesestablishes interest rates
Impact of Federal ReserveImpact of Federal Reserve Impacts the well being of the US economyImpacts the well being of the US economy
Cost of car loans is influencedCost of car loans is influenced
What was the key reason What was the key reason for the creation of the for the creation of the Federal Reserve System?Federal Reserve System?
To promote economic stability To promote economic stability FRS regulates the amount of money in FRS regulates the amount of money in
circulationcirculation
One way the Federal Reserve System seeks to One way the Federal Reserve System seeks to influence the US economy is by raising or influence the US economy is by raising or lowering the rate of interest (discount rate) that lowering the rate of interest (discount rate) that member banks must pay to borrow money from member banks must pay to borrow money from the Federal Reserve the Federal Reserve Consider that the inflation rate rose significantly from Consider that the inflation rate rose significantly from
1976 to 1980, identify the change (increase or 1976 to 1980, identify the change (increase or decrease) the Federal Reserve system could have decrease) the Federal Reserve system could have made in the discount rate to reverse that trend.made in the discount rate to reverse that trend.
Describe the expected impact this change in the Describe the expected impact this change in the discount rate would have on discount rate would have on Consumer spendingConsumer spending Business spendingBusiness spending
Explain why this change in the discount rate would Explain why this change in the discount rate would produce the desired effects on spendingproduce the desired effects on spending
FRS could have raised the discount rateFRS could have raised the discount rate This leads to a decrease in consumer This leads to a decrease in consumer
spendingspending This leads to a decrease in business This leads to a decrease in business
spendingspending With less money in circulation, it would With less money in circulation, it would
lessen inflation and promote economic lessen inflation and promote economic stabilitystability
How did the US How did the US government’s role in the government’s role in the economy change as a result economy change as a result of the Great Depressionof the Great Depression
Federal government expanded its role in Federal government expanded its role in regulating economic activity promoting regulating economic activity promoting economic growtheconomic growth
If the US government If the US government wanted to encourage wanted to encourage businesses to hire more businesses to hire more employees, would the employees, would the government raise taxes or government raise taxes or lower taxes on lower taxes on businesses? Explain your businesses? Explain your answer.answer.
Lower tax ratesLower tax rates Businesses would have more money to Businesses would have more money to
hire employeeshire employees