9.1 The Nation's Sick Economy

How did the superficial prosperity of the Roaring Twenties hurt the American economy?

• It masked weaknesses in the economy such as the struggling of several key industries.

• It forced the United States to loan and borrow money from unpredictable foreign investors.

Why did the coal industry begin to suffer in the 1920s?

• Technological innovations such as hydroelectric power provided too much competition.

• Special interest groups forced the government to tax the industry to pay for environmental damages.

Why did the automobile and construction industry begin to economically suffer by 1930?

• overproduction

• high tariffs

What happened to the agricultural industry following WWI?

• Prices plummeted and many farmers unable to pay back loans went into foreclosure

• Production fell due to unpredictable weather patterns caused by global warming

Which best describes the distribution of income in the 1920s?

• a significant gap in income inequality

• significant increases in standard of living wages

What is the purpose of the Dow Jones Industrial Average?

• a measure of the economy based on the price of stock in companies

• an average rate of production of America's largest corporations

How did many Americans respond to a steady increase in the Dow Jones Industrial Average during the 1920s?

• They began engaging speculation and buying on the margin.

• They increased savings to pay off their installment loans and mortgages.

What happened on October 29, 1929?

• The stock market crashed.

• World War II started.

How did Black Tuesday affect investors?

• People who bought on credit had huge debts and others lost their entire savings

• Investors who sold stock via "buying on the margin" were arrested

How did Black Tuesday affect the national economy?

• The economy plummeted and unemployment skyrocketed.

• The governemnt increased the price of commodities to offset costs.