4776096
Description
Flashcards by Michelle M, updated more than 1 year ago
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Created by Michelle M
about 8 years ago
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| Question | Answer |
| Overproduction | A situation in which more goods are being produced than people can afford to buy. |
| Underconsumption | A situation in which people are purchasing fewer goods than the economy is producing. |
| What happened because of underconsumption? | Since consumption of farm products decreased, caused prices to drop. Caused farms to go further into debt. # of farms & farmers began to decline, unemployment went up and companies were declared bankrupt. |
| Stock market crash | In October 1929, the period of plunging stock market prices that helped initiate the Great Depression. Not only cause, but did lead: unemployment, banks closing, people losing money regardless if they were in stocks or not. |
| Black Tuesday | October 29, 1929; the worst day of plunging stock market prices during the stock market crash that helped initiate the Great Depression. Good times were over, Stocks lost their value. This was due to many people wanted to sell their shares but very few wanted to buy. |
| bull market | A period in which stock prices are steadily rising |
| The Bull Market resulted from? | Businesses thrived in the 1920's and Americans saw this. In the late 1920's a lot of people were swept into the speculative enthusiasm for the stock market. |
| broker | a person who buys and sells stocks for clients |
| Buying on margin | Buying stock by paying a percentage of a stock's price and borrowing the rest of the money from a broker, allowing one to make greater profits if the stock does well. |
| bear market | a period in which stock prices are steadily decreasing |
| bank run | a financial crisis in which a large number of customers simultaneously attempt to withdraw their money from a bank out of fear that the bank will close |
| What led to bank runs? | Stock Market crash like Black Tuesday hurt banks. Too many people, loaners/brokers were caught in the fever as well as banks. Many investors could not pay brokers for borrowed money. In turn brokers could not pay banks for the borrowed loans. Basically the faltering economy. |
| Federal Reserve System | The central banking authority of the United States, which manages the nation's money supply. |
| What did people think of the Federal Reserve System? | People believed they further weakened the economy by driving interest rates higher, depriving businesses of the capital they needed to survive. This declined helped turn a nasty recession into an economic calamity. |
| discount rate | the rate of interest at which banks that belong to the Federal Reserve System can borrow money from Federal Reserve banks |
| Hawley-Smoot Tariff Act | A law passed by Congress in 1930 to raise the tariffs on imported goods in order to protect U.S. businesses and farmers. |
| Consequences from the Hawley-Smoot Tariff Act? | Economists blamed Congress for this act, for further hurting the economy. The record-high tariffs on both sides of the Atlantic stifled international trade. Gradually, the Great Depression spread around the globe. |
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