Question

Which effect did the use of credit have on the economy in the 1920s ​

Answer 1

The correct answer is:

It made the economy weaker.

The 1920s saw the growth of Installment Plans, meaning buying on credit. This was started by General Motors to increase sales by way of the auto loan. But the easy credit created a dramatic rise in consumer debt, together with a heavy decline in consumer savings. This would be disastrous to the economy in the 1929 economic crisis.

Answer 2

The effect that the use of credit had on the economy in the 1920s would be that with being able to not directly pay for it made people go into debt.