All causes of America's boom explained.

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  • Created by: Morgan
  • Created on: 10-06-17 19:28

The boom

The cycle of prosperity is the idea of an ongoing profit. So, when business increases, then the business will have more money, and therefore can invest in further development, and supply more goods. The new, better, cheaper supply of goods will increase demand for goods. The increase demands for goods, will increase the amount of labour required, so more people will be employed. Due to a highly profiting company, there will be more money, and therefore higher wages. Due to higher wages, there will be an increase in public spending. This will increase other businesses, and industries, such as the entertainment industry. Increase in entertainment industries will encourage tourism. Then new industries will develop and therefore more will be employed. So, there is a large economic boom! There is more money for a lot of people. This is what happened in America for various reasons: including the war, mass production, Fordeny-Mccumber tariff (1922), Smooth-Hawley tariff and shares.

In the First World War, America supplied a large amount of weaponry to European countries, including Britain and France. This meant the war profited the American economy, as money was provided into the country, this money was invested into industry development. America joined the war in 1917, three years later than most countries. This meant that America wasn't harmed as much as other countries. Europe had major devastation to the economy and land, and many countries hit a depression, money had to be invested in repairing. Whereas, America hasn't

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