ECONOMIC BOOM

Question 1

WHAT WAS THE ECONOMIC BOOM

Answer 1

• In 1920 - 1929, the economic boom which is the expansion and peak phases of the business cycle (upswing, upturn,).
• Gross domestic (GPD) increases.
• Productivity increases since the same number of workers create more goods and services, business sales increase, profit increase and household income increase.

Question 2

CORE GOODS AND VICTORY IN WW1

Answer 2

• America emerged from WWI as the leading economy and industrial power in the world.
  - A leading manufacturer of war materials, E.G exported weapons and ammunition to allies in Europe.
  - America did not face extensive damage.
• Direct more money into building the economy through industry.

Question 3

ELECTRICITY

Answer 3

- By 1929, the majority of houses in America had electricity.
- New technologies emerged, e.g. refrigerators and washing machines
- Electrical power was introduced in factories to drive machinery; thus, it became possible to introduce mass production to factories.

Question 4

MASS PRODUCTION

Answer 4

• The ability to produce goods on a large scale, produce more, reduce prices.
• Henry Ford (of Ford Motors) developed the moving assembly line
  - Reduced the time it took to build a car from more than 12 hours to two hours and 30 minutes
  - By 1925 - Price of a car was $290,
• In 1908- Price of a car was $850
• By 1929, Americans owned 23 million cars.
• Workers earned good wages ($5 per day)
• Jobs were created, roads were built, and petrol stations were built, as were hotels and restaurants.

Question 5

SHOPPING + CREDIT

Answer 5

• “Buy now, pay later” system of purchasing goods and services in which the cost is paid off in instalments.
• This meant that if a person didn’t have the money right now, they could buy something by paying it off on a weekly/ monthly basis.
• Americans could afford the latest expensive goods.

Question 6

ADVERTISING

Answer 6

• Advertisements for goods and services were placed on roadsides, on the radio, in newspapers and in cinemas.
• Chain stores such as J.C. Penney appeared for the first time.
• Catalogue shopping also became fashionable as a convenient way of buying goods.

Question 7

RISING STOCK MARKET

Answer 7

-Stock market increased in value by 20% a year on average.
- Number of shares traded doubled to 5 million per day.
- Stockbrokers began allowing customers to buy stocks “on margin.” which means brokers would lend 80%-90% of the price of the stock. Investors only needed to put down 10%-20%.
- If the stock price went up, they became millionaires.