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BELL QUIZ: USE PAGES 464-483

BELL QUIZ: USE PAGES 464-483. What nickname was given to the day the stock market collapsed on October 29, 1929? How many U.S. banks collapsed by 1933? Define “rugged individualism.” What is a shantytown? What is “direct relief” AND why did Pres. Hoover not believe in it?.

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BELL QUIZ: USE PAGES 464-483

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  1. BELL QUIZ: USE PAGES 464-483 • What nickname was given to the day the stock market collapsed on October 29, 1929? • How many U.S. banks collapsed by 1933? • Define “rugged individualism.” • What is a shantytown? • What is “direct relief” AND why did Pres. Hoover not believe in it?

  2. Objectives (Standard 6, Objective 1A)Common Core Standard RH#2 and #7 Students will… • Understand how the Great Depression affected the United States. • Investigate the impact of the Great Depression on the United States and analyze the major causes of the Great Depression. • Identify the problems and mistakes of Americans living on credit.

  3. BELL QUIZ ANSWERS • Black Tuesday. • 11,000 of 25,000 U.S. banks failed. (Also had 25% of population unemployed. That’s about 13 million workers) • It is the job of individuals to take care of themselves and their families. It’s not the governments job. • Little towns consisting of shacks. People lived in whatever they could find. • Direct relief: cash payments or food provided by the government to the poor. “Freebies.” Hoover believed in “rugged individualism.”

  4. Causes of the Great Depression • Drop in industry: steel, textiles, mining, lumber, housing industry. • Overproduction of crops and inability to pay farm loans. • The availability of easy credit: living beyond their means. • Consumers buying less goods due to high prices and low wages. • Unequal distribution of income: the rich got richer, the poor got poorer. 70% of families earned less than $2,500 per year (poverty level). NOTE: The collapse of the stock market did NOT cause the Great Depression!! Instead, the depression caused the stock market to crash.

  5. Economic terms and ideas to know • Law of supply and demand: A) Prices on goods increase when demand is high and supply of goods is low. *Example: The Sony PlayStation 3 demand was so high that stores ran out of them. But that didn't stop shoppers from buying them. Lots of people sold them over the Internet for thousands of dollars and people paid it. They paid it because they wanted it and there was a limited supply. B) Prices on goods decrease when demand is low and supply of goods is abundant. *Example: Trucks/SUV’s 4 years ago; current housing industry.

  6. 1. Industries in Trouble • Key basic industries like railroads, textiles, and steel had barely made a profit during the 1920’s (post WWI). • Many industries overproduced goods and had a large supply to get rid of=lost $ on production. • Railroads were losing out to new forms of transportation (trucks, buses, and automobiles). • Mining and lumbering were in less demand after WWI. • Coal mining took a back seat to hydroelectric power, fuel oil, and natural gas. • The housing industry slowed down since less people were building houses. When housing slows, so do jobs in related industries, like cement, lumbering, furniture, landscaping, roofing, etc.

  7. 2. Farmers • During WWI, prices rose and demand for crops such as wheat and corn soared. Farmers had planted more and taken out loans to buy land, seed and new equipment. • Demand fell after WWI, and crop prices declined by 40% or more. • Farmers boosted production in hopes of selling more, but this caused crop prices to decline even more. • Farmers defaulted on their loans, rural banks began to fail, and auctions were held to recover some of the bank’s losses.

  8. 3. Living on credit (debt) • Credit (installment plan)=buy now, pay later. • Must pay for the price of the purchased good + interest. • Credit was easily available and, so Americans racked up a large consumer debt. • Credit is easier to use than saving cash for months or years to buy the desired product. • Many people had trouble paying off their growing debts. • Consumers had to cut back on their spending. • Others defaulted on their loans and had their goods repossessed by the creditors.

  9. 4. Consumers have less $ to spend • Americans were buying less mainly because of rising prices, lower or stagnant wages, and over buying of goods on credit in the preceding years. • Factories overproduced goods, but the American consumers could not afford to purchase the goods that flooded the market.

  10. 5. Uneven distribution of income • The middle and lower class wage workers got poorer and poorer due to a large labor force available to work for low wages. • About 3/4 of American families were earning less than $2,500 a year and were living below the poverty level. • Who is going to buy the modern goods flooding the American markets?

  11. Review • Write your answers to the following questions on a piece of paper and turn it in before you leave: • List and briefly explain the 5 causes of the Great Depression. • What dangers exist from buying goods on credit? • True/False. The collapse of the stock market caused the Great Depression.

  12. http://www.youtube.com/watch?v=7EPTCm9RVRM&safe=active(The Crash of 1929)

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