Why Did The Economy Remain Depressed For So Long?

1816 Words4 Pages

Logistics






Name
Institution
Course
Tutor






1.According to Gary M. Walton and Hugh Rockoff, The Great Depression was the most important economic event of the twentieth century. In this essay, you have the opportunity to address two of the most important questions debated by economic historians of the Great Depression: What caused this unprecedented collapse? Why did the economy remain depressed for so long? (Walton and Rockoff, Chapter 23, page 422)
What caused this unprecedented collapse?
The great depression started in the United States of America on September 1929 and attacked personal income, profits of the firms, tax revenue and caused a big drop in prices. The depression was caused by the depreciation of the stock and later in …show more content…

The crash in the stock markets led to the fall in the banking sector, which led to loss of confidence. This led to policies which aimed at holding the economy together rather than pushing it forward, this led to the economy being stagnant for a long period of time.
The change in government in 1933 led to the growth of employment phase by phase. The reason why the growth seemed slow, as because it took 8 years to grow the economy to the level it was initially after the 4 year slide in the economy.
Due to the unemployment due to the great depression, it caused the firms to take a long period of time in order to reemploy the people they had sacked. The levelling of the demand and the supply of the goods and services took some time during the recession and dragged the employment along with it. This caused a long time for the recession to occur after the depression.
The financial panic which existed in 1907 and 1893 also led to the great depression because as fear struck on people at the beginning of the depression in 1929, this led to the formation of poor policies which were made to counter the fear rather than solving the problem once and for all. This made the depression take so …show more content…

Before 1929, the economy was progressing well with the standards of living rising higher than the expected. The stock market thrived well with the people more encouraged to invest in shares through buying the shares in installments. The demand and the supply had been very equal since whatever was being produced in the firms was actually what was demanded in the real economy. People owned multiple things and the banking sector was very okay in terms of the gains. However, in 1929, the catastrophe struck where the people had got shocked because of what happened in the early periods of 1907 and 1893. This caused the people who had bought the shares to sell them, there were few buyers of the shares and many sellers of the shares caused by the financial panic which had existed earlier. This caused the domino effect and caused the economy to collapse at last. The firms produced more and sold less due to lack of demand of the products they were selling and also the wage level was the same for the workers in the

Open Document