Question

1) Explain how the 1920s created growth (use examples)

Cheap Labor

Credit

Buying on margin

Advertising

2) Explain how the above relate to the multiplier effect (make sure the concept is define)

Answer 1

In 1920s cheap labor was available beacuse afresh after world war 1 there is acreation of strong trade unions in the industries and due to their strikes even in the war time foreced to pay them higher wages. As at that time Herbert Hoover, a commerce secretary suceeded in instigating indutrialist to pay workers a higher wage.

Consumption was highly influential in 1920s as Henry Ford advances in the line of efficiency created affordable automobiles and making of car ownership for Americans because the credit is made available to consumera easily.

It is bein said that the then finance secretary Andrew helped the countrymen by lowering the taxes and even income tax apart from that various investers were allowed investing in stock market which made the market bullish and helped buying on margins.

Advertisement became a central beacuse easy credit and wide variety of products for Americans were available which gave birth to advertisement industry. It further enhanced the consumption pattern of people and raise their standard of living.

2) The above relate to the multiplier effect because the groeth in differwnt fields as if in advertisement industry with cheap labor and increased consumption and standard of living increases the GDP of nation thus creates a multiplier effect because the consumption means MPC and labor means MPS woth which a multiplier effect can be generated.