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Laissez- Faire Economics

Laissez- Faire means 'Let (people) do (as they choose)

It is used to describe a system that opposes regulation or interference by the government in economic affairs apart from those necessary, in order for things the act according to laws

This is the idea of leaving business to business

Due to this there was a rise in consumerism, as government demanded fewer taxes, so people could spend more money on consumer goods

Sales of radios increased by 2500% generating $850 million by 1929

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Tax Cuts

The effects of the tax cut saw a decrease in the real income of the governement and the increase in the real income of those whose taxes were reduced

Because the government did not interfere, they did not need to raise taxes to spend on governement schemes.

Government attempted to balance the books by cutting spending to that equal the amount raised through taxes

Tax cuts allowed the economy to grow. 192-1929, real GNP grew at an annual average rate of 4.7%

Unemployment rate fell from 6.7% to 3.2%

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A tarriff is a tax or duty to be paid on imports or exports

The idea of this is that if foreign goods are high in value they more Americans with purchise American goods over foreign goods, due to the better price

Due to more people buying American goods, more money was being pumped into the economy

Protectionism- theory or practice of shielding a country's dometic industries from foreign competition by taxing imports

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Fordney-McCumber Tariff of 1922

This was a law that raised American tarriffs on many imported goods in order to protect factories and farms

This could be up to 50% taxes on items coming from abroad

In responce to this, countries put up retallatory tariffs, reducing trade between countries

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Road Building

Road building took off in the 20th century to respond to the rising number of cars.

Some of these were private like the Lincoln Highway, but by 1916 federal law and government more fuelled much of the building

1904- 1/6 of rural public roads had surfacing, by 1935 more that a 1/3 were surfaced, with concrete and asphalt

1913, The Lincoln Highway Association was created, promoting building paved highways from New York to California

Federal Highways Act (1921) built 10,000 milse of road per year

Road building aided the boom, as it allowed more people to effectively use their cars, causing production figures to soar

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