Posted by 5whitneyyy on January 13, 2010 at 11:54am
Today we took a sort of pop quiz type thing. There was one question and five answers to it. The question was what caused the excitement in the 1920's. I think I did kind of okay. People kept blaming Hurbert Hoover because the stock prices went down during is presidential time. A stock is a part of a company, if you buy stock you buy money of the company. When stocks go up you gain money, when the stocks go down the company's money goes down also. People aren't building homes now because we are low in money. Building homes requires much more than just building. They have to have workers to build it, wood, cement, and so on. World War II got us out of the great depression in the 1930's. GNP, gross national product, is the total amount of goods and services produced in a year. The unemployment rate in 1929 was 5%. The vicious cycle of the great depression... Consumption is when people buy less. So that effects production to make less money. Which leads to people losing jobs. So therefore people dont have as much money. Then, the cycle repeats.George W. Bush encouraged us to buy things during his presidency by giving people tax rebate checks. He wanted us to spend it, not put it in the bank. The idea gave them the money to spend, so producers made more money. And had more jobs open, and people made more income. President Obama gave almost a trillion dollars to banks so people would buy loans and such. But the unemployment rate still kept going up. So, we continue to be in the bad cycle. People wont buy things because they are afraid of losing their jobs. Schools are being hit hard from the economic downfall for the first time. Not knowing if they're going to get fired or not prevents people from buying things they dont need. In the 1930's the "New Deal" was created to help with the cycle.People thought the stock market was going to keep going up and up and up. Businesses weren't doing good by the late 1920's. Companies were overproducing, people weren't buying because they had to pay back what they owed. They also had everything they needed already therefore they werent buying then. When you raise interest rates there's going to be more people not spending money. The system of the 1920's was confidence, but when the federal reserve system kept making interest rates higher people started selling their stocks which made people lose confidence.
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