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lesson pretestMultiple Choice

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Question 1 • US History Studies Since 1877

Which best explains how the overproduction of goods in the 1920s affected consumer prices and the economy?

Answer
A
Prices fell as consumer demand decreased, and the economy slowed down.
B
Prices increased but consumer demand decreased, and the economy grew.
C
Prices increased along with consumer demand, and businesses prospered.
D
Prices fell as consumer demand increased, and the economy grew.

Explanation

When businesses produced more goods than consumers wanted to buy, supply exceeded demand. This put downward pressure on prices, while weaker demand and unsold goods led businesses to cut production and the economy to slow. Choice A best describes these effects.

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