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Flashcards in The US economy Deck (28)
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How was overproduction a weakness of the American economy?

Demand for one-buy items fell when everyone had got them
- factories produce fewer goods
- cut back on work forces
- fewer people afford consumer goods


How was the unequal distribution of wealth a weakness of the American economy?

Half of Americans live below poverty line
Although USeconomy generating money; money was not going into the pockets of those who needed it most


How was tariff policy a weakness of the American economy?

Tariffs protect US industry at home
- US businessmen sell goods, foreign gov set high tariffs on American goods
--> US businessmen had difficulty selling goods abroad


How was financial speculation a weakness of the American economy?

More shares bought in companies
'On the margin' - 10% of cost an borrowing remaining 90% banks
'Bull market' = more confidence and gambling
Gambling = speculation


What year did share prices not rise as much as they had done in previous years



What did some experienced investors do when the share prices did not rise as high

They sold their shares before values fell


What did the bull market turn into and what does this type of market mean?

A bear market.

This market was one where prices fall


When was the Wall Street crash

Thursday 24 October 1929


What was the Wall Street crash later called?

Black Thursday


How many shares were sold on Black Thursday and what happened as a result of this

13 million

Nobody wanted to buy - prices divided


How much did a group of bankers spend on buying the shares

$250 million


Why did bankers put so much money into buying the shares after the crash and did this tactic work?

They hoped to encourage investors to buy rather than sell shares

Tactic worked - share prices stopped falling


What day was there renewed panic about the shared and how many were sold on this day

Monday 28th October

9 million shares sold at falling prices


How many shares were sold on Tuesday 29th October

16 million shares at whatever price they could get


What was a result of the Tuesday 29th shares sold and how much did the shareholders lose

Prices of shared tumbled

Shareholders lost a total of $8 billion on this day alone


What was the price of a Woolworths share on 3 September and 13th November?

3rd - $100

13th - $52


What was the price of shares of General Electric on 3rd September and 13th November

3rd - $396

13th - $168

One of biggest falls


When did the fall of share prices bottom out?

Mid November


What was the effect of The crash on American confidence

Confidence in the American economy was destroyed


What cycle did America fall into after the wall st crash?

The cycle of depression


Describe the cycle of depression (4 points)

• reduced demand for consumer goods
• reduced production of consumer goods
• increased unemployment
• less money available to spend on consumer goods


Why was there a 'run' on the banks

People lost confidence in banks, anticipated that they are now unstable and therefore wanted to withdraw all their savings


How many banks collapsed in 1929 alone?

700 banks


Why did banks particularly suffer in the crash?

Many banks had invested their customers money in shares


How did banks attempt to recover some of their money

They began to call in loans from the companies and the ordinary people who had borrowed money from them


Why did the banks not get the money people owed them when they asked?

Because the people did not have the money, they lost it when share prices fell


What did companies who managed to stay open have to do?

Dismiss some of their workforce


How many businesses closed down during the worst period of the Great Depression