The Great Depression
The Great Depression has examples of many economic principles. Many people consider the original cause of the Great Depression to be World War 1. Before WWI Germany accounted for about sixty percent of the exports and manufactured goods throughout the world. After the war Germany turned in to a very depressed country. Germany not producing as many products and not being strong economically hurt the rest of the world because most other countries relied on Germany one way or another and had to find new means of receiving the merchandise that Germany had provided for them. The main cause for the Great Depression was the stock market crash of 1929. In the Early twenties, the economy was running smooth and the country seemed to going in the right direction. Between 1923 and early 1929 primarily everything increased, the employment rate went up. The unemployment rate was about six percent at the beginning of the Great Depression, by the low point in the crash the unemployment rate increased to approximately forty percent. The unemployment rate of farmers did not increase during the great depre
Other aspects that were thought to have contributed to that Great Depression were: the stocks being over priced, insider trading and manipulation, the federal reserve policy, and public and government officials emphasizing too much about the problems. If the supply is greater than the demand or switched around than the economy will naturally set it self. At this time America's GNP was at $104 billion and by the low point of the crash, in 1933, it was at $56 billion. This was a fifty-three percent decrease; this is the largest percentage decrease ever. The Federal Reserve Policy occurred when the new president, Adolph Miller, of the Federal Reserve Board set out to lower the stock prices, because his perception was that the high costs were damaging. ssion, infact the employment rate actually increased along with Japan's employment rate (both had a six percent increase during the crash). With all of the theories out about the Great Depression, still no one knows why they were these two increased in employment and economic growth. Part of the cause of the crash and the Great Depression was the greatly unequal distribution of money and wealth in the twenties. Insider trading, manipulation, or other forms of fraud would have been a major factor in the depression, but after investigations it was proven that there was not enough deception to be the cause of the stock market crash. Primarily, every other major country suffered from our Great Depression with depressions of their own. The public and government officials emphasized the problems in the economy too much, they repeated their statements. During the recession three fourths of the people bought only the bare necessities, such as food and clothing. This casts out any thought of the Keynesian theory that the more one saves, the more it hurts the economy. Its not that there was any extra savings but there was just too much by the wrong class of people. If the government had made it so that the distribution of money was more evenly spread out than the economy may not have gotten to be so bad.
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