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3 years ago

How did overproduction cause problems in the economy

2 answers:

8 0

Overproduction uses up resources and floods the markets with cheap goods. It becomes a vicious cycle. As the resources get used up production cost increase. But prices keep falling because demand has been saturated. As a result production stops when prices get to low.

The cycle deepens at that point to what we call a depression. Workers are laid off and farmers loose their land. Debts go unpaid and banks have to close. People lose their savings and there is even less money to buy the surpluses stuffing the warehouses.

The only thing that can be done is increase employment and raise wage levels. Enough demand has to be created so that industry can retool and begin production in areas where there are new markets.

At first this was done with the "New Deal". Government spending into infrastructure created jobs and resources for new industrial growth. Programs like Social Security, banking regulations, and unemployment insurance helped stabilize incomes and protect savings. Legalization of unions greatly increased incomes.

Some say this wasn't enough and the depression wasn't going away. But, that's academic. Government spending did end the depression when WWII started. It was the perfect depression crusher. There was no danger of overproduction, most of the stuff was being destroyed as fast as it was being produces. Same for unemployment, men were being killed as fast as they could enlist or be drafted.

We haven't completely resolved things. The overproduction/recession cycle still goes on. Resources are being used up and the environment is being destroyed. Spending on infrastructure and war are still used to keep the recessions from becoming depressions. This spending produces enormous debts and no one really has an answer for what to do about that. The Socialist answer is to prevent overproduction but I'm not sure if that can be done peacefull

Serggg [28]3 years ago

4 0

If they produce too many things and the demand is low they will have to lower their prices/pay workers less to make them.

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Passed in 1992, the 27th Amendment prevents Congress from raising its pay during the same term . What is unusual about this amen

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The 27th Amendment to the Constitution was first proposed in 1789 by the 1st Congress to the state to be ratified. It was proposed with other 10 amendments to the Constitution but lacking the number of votes necessary, it did not pass like its others sister amendments to become what is today known as the Bill of Rights. It took about more than 200 years until 1992, after a campaign was started by University of Texas at Austin student Joe Watson in 1982. This amendment prohibited the increase or decrease of a congressman´s salary within a term in office. If there is to be a reduction or increment in the income perceived by a congress member, this must take effect only until the following terms office. (The answer is that it was first proposed more than 200 years before it was ratified).

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3 years ago

sladkih [1.3K]

Answer:

market

Explanation:

An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.

Hence, a region's or country's economy is largely dependent on how resources are being allocated and utilized, how many goods and services are to be produced, what should be produced, for whom they are to be produced for and how much money are to be spent by the consumers to acquire these goods and services.

Basically, there are four (4) main types of economy and these are;

I. Mixed economy.

II. Free market economy.

III. Traditional economy.

IV. Command economy.

A market economic system also referred to as capitalism or free-enterprise can be defined as a type of economy in which prices, products and services are being determined by the market rather than the government. Thus, a market economic system is devoid (free) of government regulations, interference or control because the market (enterprises) are the ones who are saddled with the responsibility of determining the market forces.

Simply stated, a market economic system is a type of economy that is completely driven by demand and supply of goods and services.

The four (4) main elements or characteristics of a market economic system include the following;

a. Profit: businesses are all out to generate revenue and profit through the sales of finished goods.

b. Economic freedom: means of production of goods and services are controlled by the people rather than the government. Thus, the producers are free to make their economic choices or decisions such as deciding on how much is to be charged on a product.

c. Private ownership of properties: the various factors of production are owned and allocated by the people. Thus, citizens have rights to the ownership and use of private property.

d. Competition: there are many buyers and sellers of homogeneous products, as well as free entry and exit in the market. Thus, consumers are free to make their economic choices or decisions such as deciding on which product to buy, which goods interest them, where to shop for goods, etc.

A market type of economic system belongs in the box above.

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