Chapter 8 Test

Which group, who experience early hardships in the 1920’s, were the first to feel the effects of the depression?

• farmers

• bank owners

• industrial workers

• stock market investors

During the 1920s, the United States economy moved through which phase of the business cycle?

• expansion

• peak

• contraction

• trough

In 1929, the stock market crashed because

• the Federal Reserve increased the money supply.

• Germany ceased reparations payments to the United States.

• investors lost confidence in the market and rushed to sell their shores.

• depositors lost their investments and tried to withdraw all of the savings from banks.

Which of these factors helped hide economic problems in the 1920s?

• Investors lost confidence in the market.

• Farmers sold crop surpluses to pay off their debts.

• Americans purchased many consumer goods on credit.

• Wages increased at the same pace as worker productivity.

What event occurred on Black Tuesday?

• Unemployment reached nearly 25 percent.

• The Federal Reserve lowered interest rates.

• Investors sold more than 16 million shares of stock.

• Germany stopped reparation payments to the United States.

Why did so many banks collapse at the beginning of the Great Depression?

• Too many investors tried to open new accounts.

• Too many depositors tried to withdraw their money all at once.

• The stock market collapsed too slowly to collect on debts.

• The Federal Reserve put too much money into circulation.

How did protective tariffs such as Hawley-Smoot affect the cycle of depression shown in the diagram?

• Tariffs had a small effect on the cycle.

• Tariffs helped nations break out of the cycle.

• Tariffs reinforced the cycle.

• Tariffs had no effect on the cycle.

The economic good times of the 1920s became threatened by

• too much wealth being concentrated in the hands of farmers.

• a lack of credit and a steady decline in worker productivity.

• restrictions that limited how many stocks an individual could own.

• uneven distribution of wealth and growing consumer debt.

The runs on banks during the Great Depression worsened the country's economic situation because the bank runs

• caused banking institutions to collect funds from the government.

• caused overseas investors to worry about giving money to America.

• caused the government to stop reimbursing currency for gold bullion.

• caused many banks to close and created an even greater shortage of money.

How did the American economy of the 1920s differ from the economy of the 1930s?

• The 1920s saw increased consumer borrowing and speculation, while the 1930s saw a rise in unemployment and business failures

• The 1920s saw a decrease in consumer borrowing, while the 1930s witnessed prosperity and success in the U.S. economy

• The 1920s saw a large increase in unemployment, while the 1930s saw a sharp decline in unemployment and homelessness

• The 1920s saw a marked increase in the role of government, while the 1930s saw a reversal of this trend.