THE ROARING 20S 1920 1929
AMERICAN ECONOMY IN THE 1920S
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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some banking policies were unsound and had led to the over-expansion of credit
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a decrease in protective tariffs had opened American business to competition from abroad
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a wave of violent strikes had paralyzed the major industries
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consumer goods were relatively inexpensive
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Detailed explanation-1: -Among the suggested causes of the Great Depression are: the stock market crash of 1929; the collapse of world trade due to the Smoot-Hawley Tariff; government policies; bank failures and panics; and the collapse of the money supply.
Detailed explanation-2: -The Depression Many of the small banks had lent large portions of their assets for stock market speculation and were virtually put out of business overnight when the market crashed. In all, 9, 000 banks failed–taking with them $7 billion in depositors’ assets.
Detailed explanation-3: -Deflation increased the real burden of debt and left many firms and households with too little income to repay their loans. Bankruptcies and defaults increased, which caused thousands of banks to fail. In each year from 1930 to 1933, more than 1, 000 U.S. banks closed.
Detailed explanation-4: -The government’s “easy money” policies caused an artificial economic boom and a subsequent crash. President Herbert Hoover’s interventionist policies after the crash suppressed the self-adjusting aspect of the market, thus preventing recovery and prolonging the recession.