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Trends in the U.S. Economy in the 1920s

Trends in the U.S. Economy in the 1920s. U.S. History: Spiconardi. Consumerism. In order to emerge from the recession, factories switched from producing military goods to consumer goods. This switch was aided by advertising Advertising can create a demand for a good

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Trends in the U.S. Economy in the 1920s

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  1. Trends in the U.S. Economy in the 1920s U.S. History: Spiconardi

  2. Consumerism • In order to emerge from the recession, factories switched from producing military goods to consumer goods. • This switch was aided by advertising • Advertising can create a demand for a good • Can you think of an ad or commercial that caused you to buy a good or product?

  3. Consumerism • These advertisements created consumerism • Consumerism a system of creating and promoting a desire to purchase goods whether they are necessary or not

  4. The “Booming” Stock Market • Consumerism helped bring the U.S. out of its post-WWI recession • With a “strong” economy, many people chose to invest in the stock market • The more people invested in the stock market, the more the value of stocks increased

  5. The “Booming” Stock Market Bull Market Bear Market A period of decline in the stock market. It is a transition from high investor confidence to widespread investor fear • A period of an increase in stock prices and investor confidence

  6. The “Booming” Stock Market • During the bull market, even people who couldn’t afford to invest on Wall Street began to • Like consumer goods, people purchased stocks on credit • Buying on Margin  borrowing money in order to purchase stock Jane buys a share in a company for $100, using $20 of her own money, and $80 borrowed from her broker. The net value (share - loan) is $20. The broker wants a minimum margin requirement of $10. Suppose the share goes down to $85. The net value is now only $5 (net value ($20) - share loss of ($15)), and Jane will either have to sell the share or repay part of the loan (so that the net value of her position is again above $10).

  7. How much did personal debt increase during the decade of the 1920s?

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