Summarize the causes of the global economic instability that emerged in the 1920s.(1 point)
Responses
Global economic instability during the 1920s was caused by people paying off their debts as their incomes increased, which weakened the stock market.
Global economic instability during the 1920s was caused by the overproduction of the Ford Model T car, which weakened the stock market.
Global economic instability during the 1920s was caused by unequal wealth distribution and high levels of debt that weakened the stock market.
Global economic instability during the 1920s was caused by the rise of communism in Europe, which led to political unrest that weakened the stock market.
Global economic instability during the 1920s was caused by unequal wealth distribution and high levels of debt that weakened the stock market.
The correct response is:
Global economic instability during the 1920s was caused by unequal wealth distribution and high levels of debt that weakened the stock market.
The correct response is:
Global economic instability during the 1920s was caused by unequal wealth distribution and high levels of debt that weakened the stock market.
To arrive at this answer, we can analyze the economic conditions of the 1920s. During this time, income inequality was growing, with a small percentage of the population accumulating significant wealth, while the majority struggled financially. This uneven wealth distribution led to an unsustainable economic situation, as the majority of people had limited purchasing power.
Furthermore, a significant factor in the economic instability of the 1920s was the high levels of debt. Many individuals and corporations borrowed heavily to invest in the stock market or to finance various ventures, such as the purchase of consumer goods. However, as the economy started to falter, those with substantial debts found it increasingly challenging to make payments, contributing to a sense of financial insecurity.
Additionally, the stock market played a crucial role in the economic instability of the 1920s. As people paid off their debts with their increasing incomes, this resulted in a decrease in consumer spending. Consequently, companies began to experience a decline in profits, leading to a drop in stock prices. The resulting stock market crash in 1929 proved to be a significant trigger for the subsequent Great Depression.
While factors such as the overproduction of the Ford Model T car and the rise of communism in Europe may have had some impact on the global economic instability of the 1920s, the primary causes were unequal wealth distribution and high levels of debt that weakened the stock market.