The Seven Factors of the Economy
|Young women in a
- The U.S. economy had difficult times after World War I because
of two reasons:
1.) They had to switch from making war products to consumer products.
2.) Two million soldiers came home and needed to find jobs
- Gross National Product is the total value of all products and
services made in a specific country.
- An increase in the Gross National Product means the economy is
Demand for Products
- Productivity of Workers: amount a worker produces over a period
- The increase in the number of workers and their wages also increases
the demand of products because
now there are more workers that can afford products.
- Now that more people had electricity, the demand for electrical
products such as vacuums and radios increased.
- Companies tried to increase demand for products through advertisements.
- People felt optimistic.
- It's good for the economy when people feel optimistic about the
future because they spend more money.
Money and Credit
- The government made it easy for businesses to borrow money by offering
loans with low interest rates.
- Installment Plan: The consumer buys a product by paying a smaller
portion of the whole price and then making payments until the item
is paid off. Installment plans are beneficial
for consumers because it allows them to purchase products without
having to save up to pay for the full price.
- Installment plans are also beneficial for the seller because they
make money off the interest charged.
- Membership in unions decreased in the 1920's due to improvements
in working conditions and wages.
- The prices of stocks increased in the 1920's because people were
optimistic about businesses making money.
- Oligopoly: a state in which a small group of companies make and
sell almost all of the products in that market.
- Business expanded in the 1920's by opening more stores to sell
products, to repair products, and banks to help people buy products.
- Congress helped people, especially rich people, keep more of their
money by reducing income taxes.