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Explain causes of Great economic depression with 7 points?
Mamu Ally
Feb 4
Explain causes of Great economic depression with 7 points?
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Feb 4
1. Stock Market Crash: The Great Depression was triggered by the stock market crash of 1929, also known as Black Tuesday. This event saw a sudden and dramatic decline in stock prices, leading to widespread panic and a loss of confidence in the economy.
2. Overproduction and Underconsumption: In the years leading up to the Great Depression, there was a significant increase in industrial production, resulting in a surplus of goods. However, many consumers did not have the purchasing power to buy these goods, leading to a decline in demand and a subsequent economic downturn.
3. Bank Failures: As the economy weakened, many banks faced financial difficulties. A large number of banks failed, causing people to lose their savings and businesses to lose their capital. This further exacerbated the economic crisis and led to a decrease in investment and lending.
4. Decline in International Trade: The Great Depression was a global phenomenon, with economies around the world experiencing a severe downturn. International trade was greatly affected, as countries imposed high tariffs and trade barriers to protect their own industries. This decline in global trade further deepened the economic crisis.
5. Dust Bowl: The Dust Bowl, a period of severe dust storms and drought in the Great Plains region of the United States, added to the economic hardships of the Great Depression. The agricultural sector, already struggling due to overproduction and falling prices, was devastated by the environmental disaster, leading to widespread poverty and unemployment in rural areas.
6. Government Policies: Some economists argue that government policies exacerbated the Great Depression. For example, the Federal Reserve's decision to raise interest rates in the early 1930s to combat speculation and inflation actually worsened the economic downturn by reducing investment and consumer spending.
7. Global Financial Instability: The Great Depression was not solely caused by domestic factors. The global financial system was also unstable, with many countries still recovering from the aftermath of World War I. The collapse of major European banks and the inability of countries to repay war debts and reparations further contributed to the economic crisis.
2. Overproduction and Underconsumption: In the years leading up to the Great Depression, there was a significant increase in industrial production, resulting in a surplus of goods. However, many consumers did not have the purchasing power to buy these goods, leading to a decline in demand and a subsequent economic downturn.
3. Bank Failures: As the economy weakened, many banks faced financial difficulties. A large number of banks failed, causing people to lose their savings and businesses to lose their capital. This further exacerbated the economic crisis and led to a decrease in investment and lending.
4. Decline in International Trade: The Great Depression was a global phenomenon, with economies around the world experiencing a severe downturn. International trade was greatly affected, as countries imposed high tariffs and trade barriers to protect their own industries. This decline in global trade further deepened the economic crisis.
5. Dust Bowl: The Dust Bowl, a period of severe dust storms and drought in the Great Plains region of the United States, added to the economic hardships of the Great Depression. The agricultural sector, already struggling due to overproduction and falling prices, was devastated by the environmental disaster, leading to widespread poverty and unemployment in rural areas.
6. Government Policies: Some economists argue that government policies exacerbated the Great Depression. For example, the Federal Reserve's decision to raise interest rates in the early 1930s to combat speculation and inflation actually worsened the economic downturn by reducing investment and consumer spending.
7. Global Financial Instability: The Great Depression was not solely caused by domestic factors. The global financial system was also unstable, with many countries still recovering from the aftermath of World War I. The collapse of major European banks and the inability of countries to repay war debts and reparations further contributed to the economic crisis.
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