Chapter 22 Section 2
A Business Boom
Consumer Economy
• An economy that
depends on a large
amount of spending by
consumers (People that
buy stuff)
Installment Plan
• A consumer can make
partial payments at a
set interval of time until
the total debt is paid
What does the sundries category say
about life in the 1920s?
• That life was somewhat
more simple than it is
today
– Entertainment was not
as expensive
Gross national Product (GNP)
• The total value of good
and services a country
produce annually
How did the gross national Product
change in the 1920s?
• It grew steadily and
pretty noticeably
– It grew at an average
rate of 6% per year
What factors allowed for a rise in
productivity in the 1920s?
• Rapidly growing GNP
• New advertising
techniques
• Electric power for
homes and industries
• A plentiful supply of oil
• Efficient manufacturing
techniques
• Easy credit
Assembly line
• A manufacturing
process in which each
worker does a
specialized task in the
construction of the final
product
How did Henry Ford change his
assembly line to increase efficiency?
• His assembly line
moved, while the
workers stayed in place
– People criticized his
system because it would
be boring
– Ford insisted his
employees enjoyed it
What conditions made a consumer
economy possible in the 1920s?
• Increased wages and
incomes
• Technologically
advanced new
consumer products
• Lower costs
• Clever advertising
• Widespread availability
of credit
How did the advertising industry help
to develop a consumer economy?
• Advertising no longer sold
only products
• Its sought to make new
consumer goods seem
glamorous
• Fewer hard facts about
the products were
presented
• They focused more on
what would make a
person more stylish
List all the factors that led to increased
consumer spending in the 1920s.
•
•
•
•
•
•
Higher wages
Higher incomes
Clever advertising
New products
Lower costs
Easy credit
What was the goal of the American
consumer economy of the 1920s?
• to consume as many
goods as possible to
keep the economy
growing
What is installment credit?
• A person put no money
down for a product for at
least six months, giving
him enough time to
produce the product
• a person only paid half of
the cost of the product
one month, then paid
small amounts each
additional month
• A person paid for a
product in different
installments each month
How did companies in the 1920s
increase their sales and profits?
• Creating new
advertising
• allowing customers to
pay on installment plans
• Developing new chain
stores
The rise of this new consumer economy caused
many American industries to grow. Which of the
following industries declined?
• textile industry
Why did the number of Americans
purchasing automobiles increase?
• They purchased on
credit
What concerns did some people have about
the effect of automobiles in the United States?
• Some people said it led
to arguments between
parents and teenagers
over use of the
automobiles
• Attendance in church
on Sunday was on the
decline
What aspect of the consumer economy also was one
of the causes of the Great Depression?
• People were unable to
repay the marginal cost
of the declining stock