<p>Presentation Notes on the Causes of the Great Depression</p><p>Income Gap:</p><p>1) What percentage of Americans lived below the poverty line in the 1920s? - 64%</p><p>2) What is happening to wealth inequality in the 1920s?</p><p>It increases dramatically, with most wealth going to the richest in the country.</p><p>3) How did wealth inequality contribute to overproduction? </p><p>Since worker wages are not rising, they cannot afford to purchase all the products produced, leading to overproduction </p><p>4) Explain when consumer debt comes to a peak and begins to decline. </p><p>Consumer debt rises drastically until 1929 when the stock market crashes. </p><p>5) What does the amount of consumer debt show about our economy in the late 1920s? </p><p>The large amount of consumer debt shows how unstable the economy is. </p><p>Farming:</p><p>1) Why did demand for American crops increase during World War I?</p><p>American crops were needed to supply the allied war effort in WWI. </p><p>2) What is happening to the price of wheat after World War I ends?</p><p>The price of wheat drops dramatically after WWI because the demand for crops decreased </p><p>3) What is happening to the number of farms in the 1920s? </p><p>The number of farms is shrinking rapidly since many are in foreclosure. </p><p>4) What was the Dust Bowl?</p><p>The Dust Bowl was an environmental and economic disaster. The soil was depleted by overgrazing and poor farming techniques. This combined with a long drought and high winds led to giant dust storms, and most of the land of the Great Plains became impossible to farm on. </p><p>Limited Government Regulation 1) For each President during the 1920s, identify the years they served and which party they belonged to. </p><p>Harding 1921-1923-Republican Coolidge 1923-1929-Republican Hoover 1929-1932-Republican</p><p>2) Identify and explain the term used to describe these Presidents’ approaches to the government’s role in the economy.</p><p>Llaissez Faire Capitalism: hands off approach to the economy. With little to no gov’t regulation</p><p>3) What was a major trade policy passed during the Harding administration</p><p>Fordney-McCumber Tariff-tax on foreign imports</p><p>4) Explain what Hoover meant by the term “rugged individualism” </p><p>-people should not depend on the gov’t, they should work harder to solve problems.</p><p>5) Explain what is happening to the income tax rate during the 1920s. </p><p>-Going down for the very rich. </p><p>Stock Market Speculation</p><p>1) Explain the meaning of the term “buying on the margins.”</p><p>Person purchases stock with down payment, but borrow to pay for the rest. </p><p>2) Explain what is happening to the value of stocks in the 1920s. </p><p>Increase dramatically until 1929, then drops rapidly</p><p>3) What was the date for “Black Tuesday” and what happened?</p><p>Oct 29, 1929- Huge sell off of stocks AKA stock market crash </p><p>4) What happens to several banks after the stock market crash?</p><p>Thousands of banks close across the country. </p><p>5) What happens to the unemployment rate after the stock market crash?</p><p>The unemployment rate skyrockets up to 25% in the 1930s. </p>