Video Questions

Zipporiah Hicks

6th period

2/18/15

Portfolio 7.2

Zipporiah Hicks

6th period

2/18/15

Portfolio 7.2

1. Describe the causes including overproduction, under-consumption, and stock market speculation that led to the stock market crash of 1929.

During the 1920s, the wealthy grew wealthier due in large measure to government fiscal policies that both reduced business regulations and allowed the wealthy to keep more of their money. These reduced regulations and low corporate taxes increased the profits of corporations and made their stocks more valuable. At the same time, the poor and working classes lost the ability to buy products because their wages stayed the same while prices rose. This reduction in consumer consumption resulted in business overproduction and eventually caused business profits to decline. These factors were an important cause of the Great Depression. New methods of buying products, including the installment plan and buying on credit, became popular during the 1920s. These methods encouraged consumers to buy more than they could afford and to go into debt. Worst of all, banks loaned people money to buy stock with very little money down. Rising stock prices and the ability of ordinary people to buy stock on credit increased investment in the stock market and inflated the price of stocks above their actual value. Then, by October 1929, the U.S. economy was beginning to show signs of slowing down. Stockholders feared the economy was ending a period of prosperity and entering a period of recession. This caused some investors to panic and sell their stocks. As more people sold their stock, other people panicked and sold their stock as well, driving down their prices and causing a stock market crash. The stock market crash triggered other economic weaknesses and plunged the United States into the Great Depression

2. Describe the creation of works programs such as dams to help the depression and how they were efforts to control the...