Beginning in 1921, the u. s. economy entered a period of strong growth. seeing this,

president warren g. harding cut both taxes and government spending. he then left the

economy alone. the economy continued growing as calvin coolidge took office. like harding,

coolidge was not interested in guiding the economy or business. he felt that such activities

were the jobs of individual states.

economic growth began to slow in 1924. this led the federal reserve to create $500 million

in new money that banks could lend to struggling businesses and families. instead of getting out

of debt, businesses and people sunk deeper into the debts that they could not pay.

many businesses and people cut their spending in order to pay their debts. this led to less of

a demand for new products. the lower demand for new products led to fewer new jobs. as the

unemployment rate grew to 25%, incomes fell by 20-50%. this led to the cycle of debt, bank

failures, and inflation that pushed the united states into the great depression.

3. this piece outlines some of the causes of the great depression of the 1930s. what is one

effect the author mentions?

a. a decrease in bank failures

b. a high unemployment rate

c. less government spending

d. strong economic growth

what