Industrial Expansion and Scientific Management

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Questions and Answers

What effect does good deflation have on the economy compared to bad deflation?

Good deflation causes prices to rise, whereas bad deflation stabilizes prices.

Good deflation increases purchasing power while bad deflation leads to reduced economic activity. (correct)

Good deflation is associated with increased debt, while bad deflation decreases overall debt levels.

Good deflation results in lower interest rates, while bad deflation causes higher interest rates.

What was a significant reason for the establishment of the Federal Reserve in 1913?

To stabilize the currency and prevent future banking panics. (correct)

To increase the amount of gold backing the currency in circulation.

To promote the direct conversion of bonds into cash.

To control inflation by limiting the money supply.

Which of the following best describes the impact of the Contraction Act during its implementation?

It led to severe deflation and economic contractions. (correct)

It failed due to improved economic conditions, leading to inflation.

It successfully increased the money supply, stabilizing prices.

It enhanced credit availability, stimulating economic growth.

What was a consequence of the gold rush of 1849 in relation to Gresham's Law?

It illustrated how bad money drives out good money in circulation. Signup and view all the answers

Why did the Resumption Act of 1875 succeed in stabilizing the economy?

It tied the currency value firmly to gold, restoring public confidence. Signup and view all the answers

What was the main objective of the Sherman Act?

To prevent monopolies and promote competition Signup and view all the answers

What are horizontal mergers mainly aimed at addressing?

Achieving economies of scale Signup and view all the answers

Which of the following was a benefit of Scientific Management according to Taylor?

Higher productivity through standardized tasks Signup and view all the answers

What is predatory pricing?

Setting prices below cost to drive competitors out of the market Signup and view all the answers

Why were investment banks formed during the industrial revolution?

To facilitate the financing of large industrial projects Signup and view all the answers

What was a major economic concern for farmers during the postbellum era?

High levels of debt and deflation Signup and view all the answers

What is the main difference between a dual banking system and a national banking system?

Source of regulatory oversight Signup and view all the answers

What was one of the consequences of the Banking Panics?

Establishment of the Federal Reserve Signup and view all the answers

Study Notes

Industrial Expansion and Concentration

The Sherman Antitrust Act of 1890 aimed to discourage monopolies and promote free competition.
Vertical mergers integrate different stages of production within a company, reducing reliance on external suppliers and improving efficiency.
Horizontal mergers consolidate companies in the same industry, increasing market share and spreading infrastructure costs across a larger revenue base.
Mergers were motivated by increasing market power and achieving economies of scale.

Scientific Management

Frederick Taylor's Scientific Management standardized workflows and tasks, optimizing efficiency through time studies and performance-based rewards.
Taylor's methods improved productivity and reduced operational costs, especially in railroads.
Critics argued that it dehumanized workers by focusing on profit optimization instead of worker satisfaction.

Trusts and Holding Companies

Trusts consolidate companies under a single board, controlling markets and reducing competition.
Holding companies gain power by owning controlling shares of other companies, exerting influence across industries without direct mergers.

Predatory Pricing

Predatory pricing involves temporarily lowering prices below cost to drive competitors out of business.

Industrial Revolution and Oligopolies

Technological advancements and mass production facilitated the rise of large firms dominating industries, leading to oligopolies.
Economies of scale provide cost advantages for large businesses over smaller competitors.

Energy Usage

Energy usage shifted from traditional sources like wood and coal to more efficient fuels like oil and electricity during the late 19th century, driving industrial growth.

Worker Production

Industrial Revolution worker production increased due to machines, division of labor, and standardization, but also led to long hours, low wages, and harsh working conditions.

Investment Banks

Investment banks focus on large-scale financial activities, funding large-scale projects.
Commercial banks focus on everyday banking services.

Coinage Act of 1873 ("Crime of '73")

The Coinage Act of 1873 demonetized silver, aligning the US with a gold standard.

Supply-Side Economics

Supply-side economics during the Industrial Revolution focused on reducing barriers to business, such as taxes and regulations.

Gold Standard vs. Free Silver

The Gold Standard pegged currency to gold for stability and trust, while Free Silver advocated for silver coinage to increase money supply.

Bank Runs

Bank runs occur when depositors simultaneously withdraw their funds, often causing a bank to collapse due to cash shortages.

Farmers' Debt

Farmers in the late 19th century faced mounting debt due to falling crop prices, as well as high interest rates from deflationary policies.

Inflation and Deflation

Inflation erodes the value of money, while deflation increases its value. Both have impacts on debtors and creditors, affecting businesses and individuals.

The Gold Rush of 1849

The gold rush significantly increased the money supply and caused a period of inflation.

Business Cycles

Business cycles are periods of economic expansion followed by contraction. Monetary policy (like adjusting the money supply) can influence the cycle.

The Contraction Act of 1866

The Contraction Act aims to reduce money supply, but often results in deflationary pressures and economic hardship.

The Resumption Act of 1875

The Resumption Act aimed to return to a gold standard and provide more reliable currency.

The Federal Reserve Act of 1913

The Federal Reserve Act created a central bank to help manage money supply, stabilize the economy, and address periods of crisis.

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Description

This quiz explores key concepts in industrial expansion, including antitrust laws, types of mergers, and the principles of scientific management. It also addresses the impact of these strategies on productivity, efficiency, and worker dynamics. Test your understanding of these critical historical and economic themes.