Do the reading and answer the questions! You got this!Do all of them correctly. Search.ⒸLIVEREVIEWCALIFORNIA CONTENTSTANDARD 11.6.112:35 PMMoney and the EconomySpecific Objective: Describe the monetary issues of the late nineteenth and earlytwentieth centuries that gave rise to the establishment of the Federal Reserve and the tickeweaknesses in key sectors of the economy in the late 1920s.Read the summary to answer questions on the next page.Establishing the Federal Reserve SystemThrough the late 1800s, banks often closed during economic crises. The federalgovernment or the banking system could not increase the supply of money or credit.People lost what they deposited, and paper money could not be exchanged for gold.. Crises in 1873, 1883, and 1893 caused many banks to fail and businesses to gobankrupt. After a huge bank failed in 1907, Congress came up with a plan.• The Federal Reserve System was established in 1913 under President Wilson.• The Federal Reserve System still functions today to prevent bank failures andregulate the supply of money.A Weak Economy That Seemed StrongFrom the beginning of World War I in 1914 until 1929, everyone believed the U.S.economy was stronger than it had ever been. But during the late 1920s, problems inthe economy began to build up. Before the stock market crashed in 1929, the U.S.economy had the following problems:Uneven distribution of wealth The richest people got richer while workers' wagesincreased only slightly. With only a small increase in their income, most people couldn'tafford to buy all of the products of U.S. industry.Too much production with too little demand-Factories continued to producemore and more goods, but people could not afford them. Warehouses were filled withunsold goods. Most major industries had slowed down by the middle of 1929.Widespread use of credit-People began to buy goods on credit. Many owed moremoney than they could pay back. By the end of the 1920s, buying slowed.CancelStock speculation-Because it seemed the stock market would always keep rising,many people borrowed money to buy stocks. If the stocks did not rise, those who hadborrowed would not have the money to pay for them.@ 71%MFarm problems-Farmers had problems as soon as the war ended. Many hadborrowed money to buy more land and grow more crops. After the war, Europeanfarmers started producing again, and prices dropped for American farm products. Thegovernment did not help farmers, and many lost their farms.Weak industries Older industries suchilmade mining and textiles did notshare in the general prosperity.International economic problems-The United States kept tariffs high on foreigngoods to protect U.S. industries. However, if foreign countries could not sell goods inthe United States, they could not afford to buy U.S. exports or to pay back loans.SonellasChoose 4243PRACTICECALIFORNIA CONTENTSTANDARD 11.6.1Directions: Choose the letter of the best answer.4 Why did banks often close ineconomic crises through the late1800s?A Banks did not loan out enoughmoney, so they did not make much oninterest.Money and the EconomyB Gold mines closed down and therewas not enough gold to exchange forpaper money.C There was no national system toincrease the supply of money orcredit.D Banks and railroads were commonlyowned, and when railroads hadtrouble, banks closed.Which statement best describes theFederal Reserve System?AIt was established in 1913 and lasteduntil the stock market crash of 1929.B It let private bankers control theeconomy through the interest rates onloans.C It was established in 1913 andcontinues to regulate the moneysupply today.D It was established in 1913 and backedU.S. currency with silver.By the end of the 1920s, buyingslowed becauseA most people refused to borrow so theycould buy more.B most people owed more money thanthey could afford to pay back.Cmost people preferred to save money,rather than spend it.D most people believed there would beanother world war.44 During the 1920s, U.S. farmersABC continued to find a good market inEurope for their products.D45got help from the federal governmentto repay their debts.enjoyed the booming economy likemany others.46suffered from low prices and too muchdebt.How did high U.S. tariffs affect theeconomy during the 1920s?A Factories increased production to keepup with the demand for U.S. exports.B Foreign countries could not afford tobuy U.S. exports or repay U.S. loans.Prices for U.S. goods were kept high,so fewer people could afford to buythem.CDU.S. companies fought tariffs becausethey believed in open markets.Which statement describes the waywealth was distributed during the1920s?A Workers gained at a much higher ratethan owners or the middle class.BThe middle class gained much morethan the owners or workers.CThe richest people got much richerwhile working wages rose only slightly.Owners did not have enough to investin new businesses.D

Directions: Choose the letter of the 4 Why did banks often close in economic crises through the late 1800s? A Banks did not loan out enough money, so they did not make much on interest. B Gold mines closed down and there was not enough gold to exchange for paper money. C There was no national system to increase the supply of money or credit. D Banks and railroads were commonly owned, and when railroads had trouble, banks closed.

Directions: Choose the letter of the 4 Why did banks often close in economic crises through the late 1800s? A Banks did not loan out enough money, so they did not make much on interest. B Gold mines closed down and there was not enough gold to exchange for paper money. C There was no national system to increase the supply of money or credit. D Banks and railroads were commonly owned, and when railroads had trouble, banks closed.