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BELLWORK. What are some characteristics/factors of a booming economy? (List 3!) What is a disadvantage of buying goods on credit? What were some advantages of assembly line production? How did the increase in automobiles lead to an increase in other industries? - PowerPoint PPT PresentationTRANSCRIPT
BELLWORK1.What are some
characteristics/factors of a booming economy? (List 3!)
2.What is a disadvantage of buying goods on credit?
3.What were some advantages of assembly line production?
4.How did the increase in automobiles lead to an increase in other industries?
5.THINKER: What can a country do to get out of an economic downturn?
HOW STOCKS WORKCompanies are made up of stocksStocks (shares): small portions of the company that can be bought and sold for a given amount of money.
When a company does well (makes a profit), the stock increases in value.
When a company does poorly (loses money), the stocks decrease in value.
The Stock Market: the place where stocks are bought and sold.
THE CASE OF CIRCUIT CITY Opened in 1949 as a retailer of brand-name
electronics, computers, and entertainment systems. Joined the stock market in 1984 – fairly successful 2003: eliminated commission sales, 4000
employees laid off As of 2005, Circuit City held $1 billion in
investments 2007: Management Turnover, 3500 more jobs lost 2008: CEO resigned, closed 155 stores, laid off 17%
of workers 11/10/08: filed for Bankruptcy, $2.32 billion in debt 1/16/09: announced they were going out of
business – closing all U.S. stores
•On this blank sheet of paper:•Draw a roller coaster•Make sure you leave room for notes and descriptions
SPECULATION Stock market speculation- Making very high risk
investments with the hope of huge returns.
Elevated prices to false values
“Have to bet big to win big”
Signs of an “unsound economy” Uneven Prosperity
Tax cuts to wealthyRich get richer & poor get poorer
Personal DebtLuxury items seem affordable with creditNot everyone could pay it off
Playing the Stock MarketSpeculation: high risk investments for a big returnBuying on margin: bought portion of stock &
borrowed the restHigh interest rates
OverproductionOriginally high demand, but now, too much productCompanies lost a lot of product and money
All these factors combined until October 29, 1929 when. . . . . .
THE STOCK MARKET CRASHED!!!!
BLACK TUESDAYInflated stock prices began to fall at a rapid rate.
16.4 million shares were immediately sold
Sold at much lower prices than for what they were bought= huge financial losses for sellers.
Sends economy into a downfall.
THE AFTER EFFECTS#1- IMMEDIATE RESULTS:
Massive selling of stocks- all for low prices.
Many investors lost tons of money.
THE AFTER EFFECTS#2- Lack of Buying-People begin to worry about their money.
Stop buying manufactured goods- try to hold onto what money they have left.
THE AFTER EFFECTS#3- Lack of production-With people not buying many goods, companies stop producing much.
Economy begins to slow down greatly.
THE AFTER EFFECTS#4 Unemployment-Since people are not buying goods, and people have to stop making goods-
Workers begin to lose their jobs.
Many workers have no income.
In 1929, America’s population was 120 million, but only 4 million held stocks. If this was such a small number, how and why did EVERYONE become affected by the Great Crash?
Ripple Effect of the CrashThe Great Crash spread to the rest of
Americans through the combination of 4 factors:
1.Risky loans hurt banks: business and consumer borrowing
2.Cuts in production: output of goods dropped, no longer affordable
3.Rise in unemployment4.Bank runs: fearful that banks would run out
of money, people rushed to make withdrawals from their accounts. This eventually wiped out people’s savings and created bank failures.
These results of the Great Crash triggered the most severe economic downturn in history.
The Great Depression: lasted from 1929 until the U.S. entered WWII in 1941.
Impact on Farmers and WorkersAs production fell and unemployment increased, factories began to close.
Ford shut down his Detroit factories – 75,000 people were laid off.
Farm prices began to fall – In 1929 wheat was $1.18, in 1932 it was $0.49.
12 million unemployed (1/4 of labor force)
GNP: 1929 - $103 billion; 1933 - $56 billion
Impact on the WorldCountries in Latin America and Europe depended on the U.S. markets for goods, investments and loans.
Global economic system crumbled. Americans couldn’t invest in German goods German banks failed suspended reparation payments Allies stopped paying debts Industrial production fell = FAILURE OF GLOBAL ECONOMY!
CLOSUREWhat factors lead to an unsound economy?
What four factors involved all Americans in the Great Depression?
Out of those four, which do YOU feel had the biggest effect on America’s economy? Explain!
How did America’s depression send the world into a global economic crisis?
The Dust Bowl The Dust Bowl was
a period from 1930-1936 characterized by severe dust storms causing major environmental damage.
Caused by severe drought and bad farming practices
Great Plains region
Dust Bowl Reading You are now
going to read more about the Dust Bowl’s causes and effects.
As you read, answer the questions on the worksheet.
Be ready to discuss!
We will now read a poem written by Woody Guthrie
As you listen to the poem, answer the questions on a separate sheet of paper.
“Dust Storm Disaster”
“Brother, Can You Spare a Dime?”
A 1932 song by Bing Crosby
Demonstrates the horrific conditions of the Great Depression for workers.
Listen to the song and answer the questions on the board.
“Brother, Can You Spare a Dime?”
1. Why did they tell him he was “building a dream?” What happened to this dream?
2. Why does he say everything he built is now done?
3. What tone is portrayed in the song?4. What kind of life do you think he’s
living?5. How does this song relate to the
conditions we’ve been talking about during the Great Depression?