The Great Depression 1930s. Circular Flow Model  Do Now: With a partner, complete the circular business cycle flow chart by placing the letter on the.

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Presentation transcript:

The Great Depression 1930s

Circular Flow Model  Do Now: With a partner, complete the circular business cycle flow chart by placing the letter on the arrow it corresponds. You may use a letter more than once. Business circular flow chart.docx

Ms. Sanyigo’s Roller Coaster Ride  The Business Cycle:

Stock Market  In the 1920s: -What is stock? -You are investing in a company -The company uses the money to expand or grow.

Stock Market  In the 1920s: -Buy on Margin: when people buy stock they borrow 20% or more of the money Example-Stock is $10 you pay $2 and borrow $8 -Speculation: taking a risk in the stock market

The Stock Market  In the 1930s: -October 24, 1929 : stock prices start to drop so people start to sell their stock -October 29, 1929 Black Tuesday: a million shares are sold by November there is $30 billion in loses ***Remember people OVERSPECULATED & BUY ON MARGIN!

Who cares?????  If decrease stock value then businesses have less money to invest!  How does this affect everything else?

Manufacturers/Business  In the 1920s: -production decreases after WWI -so businesses come up with new inventions to increase production -unemployment is less than 4% BUT by 1925 everyone has what they need….SO…

Manufacturers/Business  In the 1930s: -Surplus -begin laying off workers or cutting pay -Stock market crash hurts business How does one business affect another? Ex: auto industry-if produce less than steel, glass, rubber companies produce less -this effects the workers!

Workers  In the 1920s: -people spend after the war but much is paid for on credit-buy now, pay later -pay decreased but prices are still high -pay in installment plans: in monthly payments for large items

Workers  In the 1930s: -business decreases so workers take pay cuts or are laid off -owe debt from credit can’t pay back -no unemployment insurance -some families start living together -unemployment hits 25% in 1933 approximately 13 million people

Banks  In the 1920s: How do banks work???? -Only 20% of families have savings -Rural (farm) banks suffer more than banks in city areas

Banks  In the 1930s: -Businesses, Farmers, Workers can’t pay back their loans -Banks lose money and close -5,500 go under because they have no money to loan -by million savings accounts are gone

Farmers  In the 1920s: -decrease production (making things) after the war and Prohibition (no alcohol) -have surplus (too much left over), crop prices low -can’t repay loans

Farmers  In the 1930s: -Dust Bowl: drought in Midwest (no rain) -lose farms because they can’t repay their mortgage or debt from buying new equipment -become migrant workers (move around) looking for work called “Okies” -some become sharecroppers (share farms)

Women  In the 1930s: -husbands leave looking for work -lose jobs to men -try to hold the family structure together -marriage rate & divorce rate decreases

African Americans  In the 1930s: -increased discrimination due to competition for jobs Scottsboro Boys: wrongly accused of a crime on a train -Showed discrimination in the justice system