USA HISTORY

Detailed explanation-1: -As consumers bought more on the installment plan, the debt forced some to reduce their other purchases. As sales slowed, manufacturers cut production and laid off employees. Jobless workers had to cut back purchases even more, causing business activity to spiral downward.

Detailed explanation-2: -The expansion of credit in the 1920s allowed for the sale of more consumer goods and put automobiles within reach of average Americans. Now individuals who could not afford to purchase a car at full price could pay for that car over time–with interest, of course!

Detailed explanation-3: -The rapid expansion of the automobile industry created jobs throughout the country and played a large role in sustaining the economic prosperity of the 1920s. In 1929, at the peak of the decade’s economic boom, there were more than 330, 000 people employed at automobile dealerships in the country.

Detailed explanation-4: -Before these, many Americans were too poor to afford to buy things because they were sold in lump sums. However, the introduction of buying on margin and installment buying allowed more people to buy things because they could buy now and pay little bits until they were paid in full.