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The Three Major Causes of the Great Depression
The Great Depression began as a result of a web of events which took place all over the world. After World War 1, the countries who were most heavily involved struggled to rebuild. The Central Powers, which had lost the war (Austria-Hungary, Germany, Ottoman Empire) had to rebuild without receiving aid. In addition, Germany was required to rebuild while paying a debt agreed upon during the Treaty of Versailles. This occurred because Germany was the last of the Central Powers to still exist. Both Austria-Hungary and the Ottoman Empire had split into multiple new countries. Austria-Hungary became Austria and Hungary, and the Ottoman Empire became to name a few Turkey, Jordan, Iraq, Syria, Lebanon etc. The Allied Powers (primarily France, Great Britain, Russia, Italy, Japan and eventually the United States) felt they had to “teach” Germany a lesson so Germany was held fully responsible for the genocide and widespread atrocities committed against civilians during the war. The result in Germany was widespread poverty and disillusionment which set the stage for the rise of a charismatic figure who would promise to redeem Germany.
Countries located throughout Europe had to rebuild after widespread bombings and loss of civilian and military lives which resulted from World War I. While the United States had lost soldiers, the war had not taken place on U.S. soil, so the civilian population was physically much less affected. At the same time, the U.S. had invested billions of dollars into the war so there was some financial loss which needed to be made up.
US History Review: Great Depression and World War II
Watch the linked video and take notes on the following:
What happened to farmers which eventually led to the Great Depression?
What is the relationship between demand for consumer goods and employment?
What were some positive effects of consumer credit?
What were some negative effects of consumer credit?
How did The Great Depression lead to the rise of Hitler in Germany?
Consumer debt occurs when people borrow money to buy goods and services for which they do not currently have the cash available to spend.
While consumer debt played an important role in triggering The Great Depression, consumer debt still plays an important role in today’s economy. This lesson will focus on the impact of interest rates on the price you pay for goods and services when you use credit instead of paying up front for purchases.
Double the number of Civil War soldiers died from disease as died in battle. In the 1860s doctors did not understand the cause of disease and were poorly trained in the known sciences. Because of this, soldiers caught many diseases, including the following:
See the following example.
Step 1. If a credit card company has an APR of 20.24%, divide by 365 to get the daily rate. First convert the percent to a decimal. Do this by dividing 20.24 by 100. 20.24/100=.2024. (A shortcut for this step is to move the decimal two places to the left.) Next divide the decimal form by 365 days to get the average daily rate. 2,024/365 = .00055
Step 2. To find your average daily balance, add the balance for every day of the month and then divide by the number of days in the month. For example, the chart below shows April credit card daily balances.
| 1. 0.00 | 7. 0.00 | 13. 115.00 | 19. 200.00 | 25. 500.00 |
| 2. 0.00 | 8. 0.00 | 14. 145.00 | 20. 200.00 | 26. 500.00 |
| 3. 0.00 | 9. 0.00 | 15. 145.00 | 21. 200.00 | 27. 500.00 |
| 4. 0.00 | 10. 100.00 | 16. 145.00 | 22. 500.00 | 28. 500.00 |
| 5. 0.00 | 11. 100.00 | 17. 145.00 | 23. 500.00 | 29. 587.00 |
| 6. 0.00 | 12. 100.00 | 18. 159.00 | 24. 500.00 | 30. 587.00 |
Step 3. According to the chart, charges were made on the following days, for the specified amounts.
Note that the daily balance accumulates throughout the month. When no purchases are made, the balance remains the same each day. The balance of every single day is used to calculate the daily balance.
When all of the days are added, the total amount is $6,428. Divide the total by the number of days in the month: $6,428/30 = $214.27.
Therefore, the interest per day is calculated as if the person a had $214.27 balance throughout the month.
Step 3. To calculate the interest charges, first multiply the average daily balance by the daily rate. $214.27 x .00055 = .1178
Next, multiply .1178 by the number of days in the billing cycle which is 30 days in this example. .1178 x 30 = $3.54. The total amount of interest charge for April would be $3.54.
If you pay your credit card bill in full, you do not have to pay interest. In this case, your credit card bill would be $587.00. However, if you pay your bill late, you would have to pay $587.00 + $3.54 = $590.54. Late fees are also typically added by the credit card company, so your bill would be even higher than what is included with the interest.
What if a person does not pay their bill in full every month? Using the final balance of $587.00, calculate what the total interest would be if a person makes a minimum payment of $20. (NOTE – When a balance is not paid in full, the monthly interest is added. After paying $20, the starting balance for May would be $567.00 + $3.54.) Try calculating with no additional purchases throughout the month.
Using the interest rate from the example given, 20.24% (average daily rate = .00055), calculate the total monthly interest for an average daily balance of $1,000, $10,000, and $20,000. After finding the total interest for each amount, consider the benefits and drawbacks of using credit cards to pay for daily expenses.
Based on what you worked out through the application activities, you should be able to see how easy it is to become overwhelmed by debt, particularly if you have more than one credit card or have a mortgage as well as college debt in addition to credit card debt. Investigate to find out how much debt people in the U.S. currently owe. Do you think we will eventually have another depression? Why or why not? Are there things we can do as individual and collectively to avoid a potential depression?
5.5 The student will b)create and solve single-step and multistep practical problems involving addition, subtraction, and multiplication of decimals, and create and solve single step practical problems involving division of decimals.