Question

1. causes of the great depression: more than 60 percent of all american families had yearly incomes of less than a year. in contrast, 24,000 of the countrys wealthiest families enjoyed annual incomes of more than 100,000. this is bad for the economy because

Explanation:

The first blank is a historical economic fact about income levels during the Great Depression era. The second part is about economic theory - when a large portion of the population (the majority with low income) has limited purchasing power (because income is low, they can't buy as many goods and services), while a small elite (the 24,000 wealthiest families) can only consume so much (diminishing marginal utility of consumption for very - rich, they won't spend all their income on consumption in the same proportion as those with lower income). Aggregate demand (total demand for goods and services in the economy) is driven by consumption (a major component), and if the majority can't consume enough, businesses produce less (since demand is low), leading to lay - offs, further reducing income and demand in a negative cycle.

Answer:

The first blank: $2,000$. The second part: when the majority of families have low incomes, they have limited purchasing power. The wealthy, although having high incomes, cannot consume enough to drive the economy on their own. This leads to a situation where aggregate demand (total demand for goods and services in the economy) is insufficient. Businesses, facing low demand, produce less, which can lead to unemployment. Unemployment further reduces income and demand, creating a downward spiral in the economy.