1. Usa: Capitalism in the 1920’s

2. 1920’s USA
Coolidge’s administration of the 1920’s implemented policies reflecting his laissez-faire stance.
The 20’s USA was a period of prosperity and consumerism.
Industrialists such as Henry Ford helped spur the economic boom.
Consumerism _________________________________________ _______________________________________
As the free market economy expanded and rapidly modernized, major changes also occurred.

3. Along with this, the industrial expansion of the late 19th and early 20th centuries created a noticeable income disparity, or difference in earnings, between rich and poor.
Following the extended period of prosperity in the 20’s the economy would cycle into the severity of depression in the ______________________________________________ ______________________________________________
It led to a growth in the government involvement in economies that continues in many forms to this day. (modern liberalism/welfare capitalism)

4. SS 30 Economic Systems - Business Cycle
I. The Business Cycle
i. The Business Cycle: _____________________________________________________________________________________________________________________________________________
a. Until the Great Depression it was assumed the capitalist economy went through a repetitive cycle.
b. GNP(Gross National Product): A measure of total output/production.
SEE PAGE 205
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SS 30 Economic Systems - Business Cycle

5. The Circular Flow of Money
i. To determine where we are in the Business Cycle, we must measure the health of our economy
ii. The Circular Flow of Money
Good Economy
People Work
Even more People Work People get paid
Factories hire to meet demand People Spend
Increase demand for product Buy Goods and services
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SS 30 Economic Systems - Business Cycle

6. The Circular Flow of Money
Bad Economy
People have no money
Factories lay people off People don’t buy things
Low demand for goods and services
iii. _______________________________________________________________.
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SS 30 Economic Systems - Business Cycle

7. III. The Stock Market
i. The Stock Market is a place where shares of companies are bought and sold.
ii. Larger companies are often broken up into shares
iii. Shares of these companies change in price depending on how the company as a whole is doing.
iv. ____________________________________________________________________________________________________________________________________________________________

8. SS 30 Economic Systems - Business Cycle
The Stock Market
v. Playing the Market
a. ____________________________________________________________________________________________________________________________________________________________
b. Example: If you bought 100 shares of HB Pencils @ $2 and sold them for $20 you would make:
$1800
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SS 30 Economic Systems - Business Cycle

9. SS 30 Economic Systems - Business Cycle
The problem with “playing the market” is that ________________________________________________________________________________________
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SS 30 Economic Systems - Business Cycle

10. SS 30 Economic Systems - Business Cycle
The Stock Market
vii. Buying on Margin
a. Common ________________________________________________________________________________________________________
b. This is called Buying on Margin
c. All that’s needed is some collateral (Car, Home)
d. If your stocks go up, you make money and can pay back the loan with profit for yourself.
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SS 30 Economic Systems - Business Cycle

11. SS 30 Economic Systems - Business Cycle
The Stock Market
If the ____________________________________________________________________________________________________________________________________________________________________________________
Margin Call: The bank wants you to pay back your loan.
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SS 30 Economic Systems - Business Cycle

12. 1929 & continuing factors
In the 20’s many people began borrowing money to invest in the stock market on the assumption that prices/worth of stocks would continue to rise with prosperity.
These investments actually inflated the stock prices.
When prices finally stopped rising, people began selling their stocks to _____________________________________________ _____________________________________________ _____________________________________________ _____________________________________________