The reasons for the Economic Boom

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  • Created by: ellen
  • Created on: 08-05-13 12:29

The reasons for the Economic Boom

Policies of the Republican Presidents: The 'Laissez Faire' policy was introduced and followed by the Republicans which allowed big businesses to expand with minimal government intervention. Warren Harding introduced tariffs which would make foreign goods more expensive than US goods, encouraging the public to buy within the country and contribute to the economy. He also introduced low taxation because the Republicans believed that if people were able to keep more money, they would spend it on Americans goods and they reinvest that money in the industries.  

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The reasons for the Economic Boom

Technological Advances: This led to the production of many new and exciting products e.g. fridges, radios. Many of these were labour-saving devices. Industries were modernised by new production strategies such as assembly lines which reduced labour forced need to complete the job with high efficiency. New roads had to be built for the increased numbers of cars. This meant more jobs for the construction and building industries, creating even more jobs. People with jobs could afford to spend part of their wages on luxury goods such as a new car or a vacuum cleaner. It was an on-going cycle.

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The reasons for the Economic Boom

Easy Credit: Money was cheap and made easier to borrow, the banks were ready to lend freely without insurance and they didn't have to pay back straight away. This encouraged people to purchase new gadgets (available because of new technology) even though many didn't have money to back the credit. Borrowing increased the amount of money available to spend and therefore, the demand for goods.

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