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Crash of 1929

In: Other Topics

Submitted By Fissur
Words 729
Pages 3
Ryan Peace
Prof. Young
Macro Econ
Film Analysis on “Crash of 1929”

Discuss 3 economic theories raised during the film. Economic Growth – positive. Spirits were high during the roaring 20s. New inventions and mass marketing encouraged people to spend and spend. Mass production made new technology affordable to middle class. New construction and automobiles were major factors causing the economic growth of the period. Price Level Stability – positive. The prices of stocks were easily manipulated by groups pooling together their money, or in some cases by just one man who managed a great amount of money and could single handedly drive the price of a stock up. Wealth without work – positive. People were paying just 10% of the price of a stock and borrowing the rest. If the stock went up like it had been during the earlier part of the decade they were able to pay their debt off with the increase, if it decreased however, they now owed the original 90% they borrowed, plus interest. And the original 10% was not worth anywhere near what they had first borrowed. What public policies did the government utilize during the 1920s that could have influenced the crash of 1929? Consumer credit. People were allowed to buy on margin. This was not such a terrible thing with tangible products, like appliances, but it was a disaster with the stock market. The value of a refrigerator is not going to decrease in an instant the way a stock could. Supply-side economics, the thought that economic growth can be most effectively created by making it easier to produce/supply goods and services. Republican administrations forged a close relationship between government and business. Taxes on the wealthy were also reduced, after being raised during World War I. Overconfidence at this time contributed to speculation. What are some of the key supply and demand issues

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