Ch. 22 sec. 1 critical thinking #4

Judging from the events of the late 1920's and early 1930's, how important do you think public confidence is to the health of the economy?

Public confidence in the economy is crucial to the survival and stability of it. The stock market crashed in 1929 because people were not well-educated in the stock market business and when the prices began to fall instead of waiting it out,a portion of the country panicked and sold their stocks. When other stock holders saw this huge sellout they decided to sellout, but with so many people selling there wasn't enough people buying and the stock market crashed. If stock holders had been confident that with every decrease of prices there would be an increase because thats what always happens, they would not have sold out. Another part of the economy that needs alot of trust and confidence is family income. At this time more than 70% of families annual income was lower than $2500, but with the steady increase in new household products and electricity becoming more and more available families were overcome with the lack of money to buy these new products.The way to get through this need is not to panic, but instead save as much as you can to build up and be able to support your family.