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Declines in consumer demand, financial panics, and misguided government policies caused economic output to fall in the United States, while the gold standard, which linked nearly all the countries of the world in a network of fixed currency exchange rates, played a key role in transmitting the American downturn to other countries.The recovery from the Great Depression was spurred largely by the abandonment of the gold standard and the ensuing monetary expansion.
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.
The downturn became markedly worse, however, in late 1929 and continued until early 1933. Between the peak and the trough of the downturn, industrial production in the United States declined 47 percent and real gross domestic product (GDP) fell 30 percent.
The wholesale price index declined 33 percent (such declines in the price level are referred to as unemployment rate exceeded 20 percent at its highest point.
The economic impact of the Great Depression was enormous, including both extreme human suffering and profound changes in economic policy.
Cause And Effect Essay Great Depression Essay On Japan Earthquake 2011
The Great Depression began in the United States as an ordinary recession in the summer of 1929.Europe; it was milder in Japan and much of Latin America.Perhaps not surprisingly, the worst depression ever experienced by the world economy stemmed from a multitude of causes.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.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.Germany’s economy slipped into a downturn early in 1928 and then stabilized before turning down again in the third quarter of 1929.The decline in German industrial production was roughly equal to that in the United States. While some less-developed countries experienced severe depressions, others, such as Argentina and Brazil, experienced comparatively mild downturns.Great Depression, worldwide economic downturn that began in 1929 and lasted until about 1939.It was the longest and most severe depression ever experienced by the industrialized Western world, sparking fundamental changes in economic institutions, macroeconomic policy, and economic theory.