Economic Changes in the 1920s

							                        Economic Changes in the 1920s

Economy: refers to things like prices, jobs, wages, employment, etc.

Inflation: rapidly rising prices
             - occurred after WW I : wages rose slower than the inflation


Prosperous / Boom Economies: when there are plenty of jobs, good wages,
and prices are not too high. This is what happened in the 1920s:


                                Demand for Goods

      Higher purchasing                                   Higher
         Power                                            Production



      Greater Profits                                     Greater Sales


                                Higher Employment



Stocks: an investor buys a portion of a company hoping to profit in two
ways:
      a) by receiving annual dividends (profits) of the company
      b) by selling the stock of a company for more than the original price




Buying on Margin: buying stocks with a small payment and borrowing the
rest of the money needed from a stockbroker or banker.
             - If stock value increased: buyer sells stock at higher price
             - If stock value decreased: buyer couldn’t afford to pay off loan
       * ** not permitted in Canada today ***