20’s and Crash Notecards

Roaring 20’s  Term used to refer to the 1920’s when the economy was booming and people were living good lives.  Characterized by lavish parties, high spending, entertainment such as baseball, movies, etc., flappers, and installment plan.  Term used to refer to the 1920’s when the economy was booming and people were living good lives.  Characterized by lavish parties, high spending, entertainment such as baseball, movies, etc., flappers, and installment plan.

Prohibition  18th Amendment to the Constitution which banned the manufacture, sale and distribution of alcoholic beverages.  Was suppose to end all of the social problems in the country but actually led to the development of organized crime.  Bootleggers and Speakeasies.  18th Amendment to the Constitution which banned the manufacture, sale and distribution of alcoholic beverages.  Was suppose to end all of the social problems in the country but actually led to the development of organized crime.  Bootleggers and Speakeasies.

Installment Plan  Allowing people to buy things on credit without putting much money down.  Good for the economy during the 20’s but will be bad in the future because people are getting deeper in debt and have no way to pay it off.  Allowing people to buy things on credit without putting much money down.  Good for the economy during the 20’s but will be bad in the future because people are getting deeper in debt and have no way to pay it off.

Supply and Demand  Economic theory based on the idea that the “perfect price” is set when the supply of goods meets the demand of goods. Any small difference will cause prices to go up or down.  Governs our society today…example…Wiis during Christmas.  Economic theory based on the idea that the “perfect price” is set when the supply of goods meets the demand of goods. Any small difference will cause prices to go up or down.  Governs our society today…example…Wiis during Christmas.

Stock Market  a system where people buy stocks (shares) in a company in the hopes of either receiving a part of the profit (dividend) or selling in for a higher price in the future.  Money made in the stock market is all “imaginary” until you actually sell your stocks.  a system where people buy stocks (shares) in a company in the hopes of either receiving a part of the profit (dividend) or selling in for a higher price in the future.  Money made in the stock market is all “imaginary” until you actually sell your stocks.

Speculation  Buying and selling stocks frequently to make a quick and large profit.  Very risky but have the opportunity to make a lot of money.  Buying and selling stocks frequently to make a quick and large profit.  Very risky but have the opportunity to make a lot of money.

Buying on the Margin  Practice done when people did not have all of the money to buy a stock. They would put a little money down and borrow the rest to pay for their stocks.  It is a problem because when the market crashed they owed a lot of money and had no way to repay their loans.  Practice done when people did not have all of the money to buy a stock. They would put a little money down and borrow the rest to pay for their stocks.  It is a problem because when the market crashed they owed a lot of money and had no way to repay their loans.

Black Tuesday  Oct. 29, 1929 when the stock prices fell sharply and many people lost all of their money in the market.  This “crash” had a big impact because everyone lost all of their money, were in debt, and had no way to make their payments.  Oct. 29, 1929 when the stock prices fell sharply and many people lost all of their money in the market.  This “crash” had a big impact because everyone lost all of their money, were in debt, and had no way to make their payments.

Run on the Banks  After the Market Crashed people flocked to the banks to withdrawl all of their money.  Banks did not have everyone’s money because it too was invested in the market. Thus people lost their savings and banks had to close.  After the Market Crashed people flocked to the banks to withdrawl all of their money.  Banks did not have everyone’s money because it too was invested in the market. Thus people lost their savings and banks had to close.

Causes of Great Depression  Weakened industries.  Struggling farmers  Country in debt  Stock Market Crash  Weakened industries.  Struggling farmers  Country in debt  Stock Market Crash