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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The role of the federal government increased.
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The role of the federal government decreased
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There was no change to the federal government.
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The government’s response ended quickly after the Great Depression.
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Detailed explanation-1: -Based on the assumption that the power of the federal government was needed to get the country out of the depression, the first days of Roosevelt’s administration saw the passage of banking reform laws, emergency relief programs, work relief programs, and agricultural programs.
Detailed explanation-2: -Monetary Contraction. The Depression was precipitated by a one-third drop in the money supply from 1929 to 1933, which was mainly the fault of the Federal Reserve. The Fed made further errors that helped put the economy back into recession in 1938.
Detailed explanation-3: -There was a significant drop in consumer spending and investments that caused a major decline in industrial output and laid off employees from companies. By 1933, the unemployment rate had risen to 25%, and the GDP of the USA contracted to half of its value due to deflation.
Detailed explanation-4: -The U.S. economy shrank by a third from the beginning of the Great Depression to the bottom four years later. Real GDP fell 29% from 1929 to 1933. The unemployment rate reached a peak of 25% in 1933. Consumer prices fell 25%; wholesale prices plummeted 32%.