Question

Which statement explains the cause-and-effect relationship between government policies in the 1920s and the rise in gross domestic product?

1) Regulations against collective bargaining kept wages low.
2) Regulations prohibited the importation of inferior products.
3) High tariffs allowed domestic production to expand with little competition.
4) High tariffs created beneficial conditions for exports to foreign markets.

Answer 1

High tariffs introduced in the 1920s intended to protect domestic businesses by making imported goods more expensive, which led to an expansion of domestic production and a rise in gross domestic product, but long-term effects were complex, contributing to global trade declines.

3 is correct

Step-by-step explanation:

The statement that explains the cause-and-effect relationship between government policies in the 1920s and the rise in gross domestic product is that high tariffs allowed domestic production to expand with little competition. During the 1920s, the government raised tariffs to protect US businesses. These taxes made foreign goods more expensive, promoting the development of national industries. The Smoot-Hawley Tariff of 1930, for example, significantly increased tariffs, with the initial intention of limiting foreign imports to spur domestic economic growth. However, this led to retaliatory tariffs by other nations, which consequently reduced international trade significantly.

By making imports more costly, these protectionist policies encouraged consumers to buy domestically-produced goods, fostering the growth of local industries. As domestic industries expanded, they contributed to the rise in GDP during that time. However, the long-term impact was complex, leading to international trade struggles and contributing to the conditions that exacerbated the Great Depression.