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LEARNING TARGET: I will be able to explain how the economic growth of the 1920s was built on shaky foundations and doomed to fail.
Illinois Social Science Standards
Illinois Social Science Standards
SS.EC.3.6-8.MC: Evaluate employment, unemployment, inflation, total production, income and economic growth data and how they affect different groups.
Bell Ringer Question:
Bell Ringer Question:
Important Vocabulary:
Debt - An amount of money owed by a person, business, or government when they spend more money than their current income.
Loans - is the act of giving money, property or other material goods to another party in exchange for future repayment of the amount along with interest.
Interest - The cost a person must pay for the privilege of borrowing money.
Stock Market - a market, or location, where stocks can be bought or sold.
Stock - term describing the ownership of part of a business which means the owner benefits from the profits or losses of that business.
Investment - an item that is purchased with the hope that it will generate income or will increase in value in the future.
Where is our Money?
Where is our Money?
There is not a vault where all money is kept.
The value of your money declines if there is inflation, or an increase in the supply of money.
Banks do not profit from simply holding money in vaults.
How do Banks Work?
How do Banks Work?
People deposit money into banks.
Banks loan those deposits to borrowers.
Borrowers pay back the loan in installments with interest payments.
Banks collect a percentage of the interest as profit.
Depositors make money for letting Banks loan their deposits.
If Americans are going more in Debt, what does this mean?
If Americans are going more in Debt, what does this mean?
Consumers are more than they have money for.
Consumers trust they will be able to pay the money back to banks.
Banks trust Consumers will be able to pay the money back.
Producers of goods, factories, think the economy is growing.
Why does the price of corn and wheat rise sharply in 1915, and decline rapidly after 1920?
Why does the price of corn and wheat rise sharply in 1915, and decline rapidly after 1920?
If you were a farmer, how would you react to corn and wheat prices increasing in 1915? What risk would you take?
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