Naked Economics

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The Great Depression unfolded during 1929 and extended all throughout the 1930s and it led to severe declines in economic activity, and major shifts in political and societal aspects. These effects can be traced back to multiple economic missteps that accumulated into the Great Depression. In Naked Economics: Undressing the Dismal Science, author Charles Wheelan provides in-depth analyses of economic principles, which can also be applied to further understand the causes of the Great Depression. Chapters four and seven help to understand principal factors, such as the stock market crash and the role of government intervention, that contributed to the Great Depression. One of the biggest causes of the Great Depression was the stock market crash …show more content…

and acting accordingly” (Wheelan, 163). As the values for stocks skyrocketed during the 1920s, like the shoppers at the grocery store, many people were looking for the fastest way to make money. However, in September of 1929, trends in the market were changing, with overinflated shares and higher interest rates; and by October 24, 1929, thousands of people rushed to sell their holdings immediately (FEE). While “betting” on the short-term gains, stockholders did not expect the sudden drop in value, leading to panic and immediate withdrawal because everyone was acting accordingly to what they saw. The intense amount of speculation pushed prices to unsustainable levels, and ultimately led to the crash of the stock market, adding to the era of the Great Depression. Another major contributing component to the Depression was the government. In Chapter four of Naked Economics, Wheelan introduces the idea of government intervention and how it can affect economics both negatively and positively (80). When connected to the Great Depression, the interaction between the American government and economics is a prime

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