Cause And Effect Essay Great Depression

The Great Depression, which began in the United States in 1929 and spread worldwide, was the longest and most severe economic downturn in modern history.It was marked by steep declines in industrial production and in prices (deflation), mass unemployment, banking panics, and sharp increases in rates of poverty and homelessness. (1) The stock market crash of 1929 shattered confidence in the American economy, resulting in sharp reductions in spending and investment.(2) Banking panics in the early 1930s caused many banks to fail, decreasing the pool of money available for loans.

The Great Depression, which began in the United States in 1929 and spread worldwide, was the longest and most severe economic downturn in modern history.

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Virtually every industrialized country endured declines in wholesale prices of 30 percent or more between 19.

Because of the greater flexibility of the Japanese price structure, deflation in Japan was unusually rapid in 19.

The severity of the Great Depression in the United States becomes especially clear when it is compared with America’s next worst recession, the Great Recession of 2007–09, during which the country’s real GDP declined just 4.3 percent and the unemployment rate peaked at less than 10 percent.

Great Britain struggled with low growth and recession during most of the second half of the 1920s.

Because of banking panics, 20 percent of banks in existence in 1930 had failed by 1933. (1) Abandonment of the gold standard and currency devaluation enabled some countries to increase their money supplies, which spurred spending, lending, and investment.

(2) Fiscal expansion in the form of increased government spending on jobs and other social welfare programs, notably the New Deal in the United States, arguably stimulated production by increasing aggregate demand.

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(3) In the United States, greatly increased military spending in the years before the country’s entry into World War II helped to reduce unemployment to below its pre-Depression level by 1942, again increasing aggregate demand.

In most affected countries, the Great Depression was technically over by 1933, meaning that by then their economies had started to recover.