What two things did the federal

government do to try to help the

failing economy in the 1920s?

1. Raise interest rates

2. Hawley Smoot Tariff

Do Now:

What is a “depression”?

Now Do:

Is the United States experiencing

a depression right now (or have

we recently)?

Depression:

a sustained, long term

downturn in an economy; more

severe than a recession; a

decline in GDP* of more than

10% for more than a year

*GDP: the amount of goods/services

produced in a year

Objectives -Define “depression” in economic terms

-Describe factors that led to the Great Depression

EQ:

Agenda -Notes

-Skits

-Video Clip

How can economic excesses contribute to

hardship and instability in America?

The Business Cycle

boom period of prosperity; business well above

normal. (Factories turn out large quantities of goods

and profits rise. Most people have jobs, and most

wages to increase.)

panic period of uncertainty or fear followed by a

decrease in business activity. (The term "panic" has

sometimes been used to referred to as the start of a

depression.)

depression business is far below normal. Production

decreases by 15% or more during severe depressions.

(This period is marked by high unemployment, a

decline in company profits, and a cutback in wages.)

recession business is somewhat below normal.

(Employment, wages, and company profits are down,

but not as dramatically as during a depression.)

Identify the Boom, Panic, Depression and Recession in this graph:

•A: Recession

•B: Boom

•C: Panic

•D. Depression

READING…

Use pgs. 464-471 in your textbook

to help you identify factors

contributing to the Nation’s Sick

Economy…

The Nation’s Sick Economy

Serious Problems in the Nation’s

Economy

Industry

Key industries barely made a profit

Some businesses fell behind

Foreign competition

New American technology

Hawley-Smoot Tariff Act

Highest protective tariff in U.S. history

Declining demand for goods

Coal industry declined because of new sources of energy

New housing starts declined

Affected other businesses dependent on home construction

Agriculture

Demand for farms products fell significantly

Move from country to city=less need for farming products

Prices fell

Farmers could not pay debts and lost farms

Rural banks failed

Consumer Spending

Easy credit

Given out by businesses

Encouraged consumers to pile up debt

Consumer decreased purchases because

Rising prices

Stagnant wages

High levels of debt

Distribution of Wealth

Standard of living

Half of America’s families did not make

enough

Rich kept getting richer/poor getting poorer

Most consumers had too little to spend

Hurt American factories

Stock Market Investors

Engaged in speculation

Bought on margin (pay only a small percentage of money owed for the stock)

Brought the market upward

Caused great wealth on paper

Panic: Market crashed

Investors lose everything

Dow Jones Industrial Average plummets

Measures the stock market’s health

Black Tuesday

October 29- The day the stock market crashed.

Black Tuesday

October 29, 1929- The day the stock market crashed.