The Economy

The Economy Introduction  The economy of a country refers to things like prices, jobs, wages and employment.  The economy of a country changes from time to time. Boom years are when the economy is strong: plenty of jobs, good wages and low prices  Recession years, and in extreme cases, depression years, are when jobs are scarce, many people are unemployed and people cannot afford to buy many things.

Economic Trends: Economic Activity Strong Weak ww1 Roaring 20’s Great Depression Stock market Crash Currency drop ww2

A Prosperous Economy Boom Times Demand for Goods increases Higher Production Higher Employment Greater Profits Higher Purchasing Power The Boom Times

1920 – The Confident Years  A time of confidence and growth  “easy street” buy now, pay later  overproduction of goods

A Depressed Economy Depression Lower Production Fewer sales Loss of jobs Less Profits Less Purchasing Power The Great Depression Demand for Goods goes down

The Great Depression What causes the economy to change from prosperity to depression? Nobody knows for sure.

The Stock Market Crash October 1929 On October 24, 1929 investors panicked when shares purchased on margin (with borrowed money) began to decline in value. Many dumped (put up for sale) their stock before the prices went even lower. The extra stock that were for sale created a surplus causing the prices to fall even lower – eventually below margin. Eventually stock were worth less than what people had borrowed to buy them. People went broke!

1930’s – The Bust Years  much doom and gloom  little faith in the economy or the government  factories closed making jobs hard to find

1930’s – The Bust Years cont.  world demand and the prices for Canada’s natural resources collapsed  Those that had borrowed money (bought shares on margin) had to pay back what they had borrowed (margin call) – even though their shares were now worth nothing – many bankruptcies