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Terms/concepts you need to know:

Economic terms/concepts free market (capitalism) vs. command economy capitalism vs. socialism (shares of) stock corporation speculation stock market (ex. New York Stock Exchange, NYSE) Banks interest inflation and deflation recession and depression tariff. Political terms/concepts

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Terms/concepts you need to know:

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  1. Economic terms/concepts free market (capitalism) vs. command economy capitalism vs. socialism (shares of) stock corporation speculation stock market (ex. New York Stock Exchange, NYSE) Banks interest inflation and deflation recession and depression tariff Political terms/concepts republic parliament Treaty of Versailles coalition government Terms/concepts you need to know:

  2. CHAPTER 31 SECTION 2 • The world from 1919-1939 • Political problems • Economic problems

  3. CHAPTER 31 SECTION 2 • I. Political problems • A. The new European democracies (Ex. Austria, Poland, Hungary, Czechoslovakia, Germany, etc.) formed after the war are weak • 1. Citizens have little experience with representative government • 2. Large number of political parties (leads to formation of coalition governments [what are these?]) • 3. Frequent changes in government [why would this be a problem?] • 4. Slow recovery from cost and devastation of WWI

  4. CHAPTER 31 SECTION 2 • I. Political problems (cont.) • B. The Weimar Republic (Germany) [why is it called the Weimar Republic?] • 1. Problems: • Many different political parties • Blamed for defeat in WWI and signing Treaty of Versailles • Economic weaknesses: inflation from printing money, high taxes, huge debts, reparations to Allies • Growing power of communists How is the Weimar Republic structured?

  5. CHAPTER 31 SECTION 2 • I. Political problems (cont.) • B. The Weimar Republic (Germany) • 2. Attempts at recovery • Dawes Plan: provided loans from US to Germany to halt inflation and stabilize economy • By 1929, Germany had increased production and decreased unemployment Charles Dawes

  6. CHAPTER 31 SECTION 2 • II. Economic problems: the Great Depression • A. Causes of the Great Depression • 1. Farmers over-produced during WWIfood prices drop, farmers lose land and must borrow money • 2. Despite high profits for businesses in 1920s, wages for workers do not increaseworkers use credit to purchase goods [why would this be a problem?] • 3. To promote growth, the govt. (through the Federal Reserve) and banks keep interest rates low [what would be the effect of low interest rates?] • 4. Speculation, optimism, and demand cause stock values to increasepeople buy stocks on margin

  7. CHAPTER 31 SECTION 2 • II. Economic problems: the Great Depression (cont.) • B. The Stock Market crash (Oct. 24-29, 1929) • 1. Investors grow nervous about stock pricesbegin selling off stock • 2. Oct. 29, 1929 (“Black Tuesday”): stock prices plunge as people panic and sell stocks (16.4 million) • 3. Banks, companies, and individuals wiped outleft with huge debts that can’t be paid • 4. Signals the beginning of the Great Depression: long period of high unemployment and low production

  8. CHAPTER 31 SECTION 2 • II. Economic problems: the Great Depression (cont.) • C. Effects of Great Depression (in US): • 1. Bank failures • 2. Business failure and high unemployment: Low wages, high debt, loss of money in stock marketdecreased demand for goods and less productionworkers laid offless purchasing of goodsmore workers laid off • Gross National Product (GNP): drops from $104 to $59 billion from 1929-1933 • Unemployment: 25% by 1933 (1 out of 4 Americans out of work) • 3. Govt. raises tariffs (Smoot-Hawley Tariff, 1930) to protect industries, but it backfires [why would this not work?]

  9. CHAPTER 31 SECTION 2 • II. Economic problems: the Great Depression (cont.) • D. Effects of Great Depression (in world): Collapse of American economy devastates the rest of the world • 1. US banks stop new foreign loans and demand repayment of existing loans • Germany suffers most from loss of US investment • 2. Raising of tariffs causes worldwide trade to grind to a halt • Nations dependent on exports (ex. Japan, Brazil, Argentina) suffer • 3. Unemployment soars in Europe • By 1932, 30% of Germans are out of work

  10. CHAPTER 31 SECTION 2 • II. Economic problems: the Great Depression (cont.) • E. Responses to the Great Depression • 1. Britain, France, and the United States • People elect socialist leaders who form coalition govts. (ex. Popular Front in France and National Govt. in Britain) and liberal Democrats take power in US (Franklin D. Roosevelt elected in 1932) • Expansion of govt. power and involvement in economy • Govts. engage in defecit spending on public works and social welfare programs (ex. New Deal in US) [why would govts. Do this?] • Recovery slow and unevenweakens faith in democratic govt. • 2. Germany, Italy, and Japan • New political parties emerge that combine intense nationalism, socialist ideas, and strong dictatorial rule (ex. Fascists in Italy and Nazis in Germany)

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