Conditions that Led to the Great Depression

1551 WordsJul 13, 20187 Pages
Q2: There are multiple conditions that occurred in the US that aided in the economic downturn leading to the Great Depression. Prior to the stock market crash of 1929, a classical approach, advocated by Adam Smith, was how America felt its political and economic system functioned. Adam Smith’s classical approach is embedded in the concept of a laissez-faire economic market, which suggests that the US would thrive if left alone (lecture). This approach requires a noninterfering government and allows individuals to follow their own self-interest, which was supposed to keep economic order (Cochran & Malone). Additionally, as discussed in lecture, this theory assumes that markets are inherently stable, self-adjusting and self-regulating, and…show more content…
Whether or not a country uses a relative or an absolute poverty measure undoubtedly influences the understandings of poverty of its citizens. In terms of federal poverty measure there are two different versions; one is poverty thresholds and the other is poverty guidelines. Poverty thresholds are a version of the federal poverty measure, developed by Mollie Orshansky in the 1960’s, which is the official measure of poverty that was based off of the cheapest food plan for a family (Schiller). In 1955, studies reflected that poor families spent about one-third of their income on food; so multiplying a low-cost food budget by three determined how much income a family needed (Schiller). Poverty thresholds are mainly used to calculate the number of poor Americans and other poverty population figures (lecture). Since then the threshold has only been adjusted for inflation and is an absolute threshold that considers a family poor if its pre-tax cash income falls below the poverty threshold (lecture). Since the food plan was only supposed to be used temporarily or for emergencies, it is clear it needs some updating. Poverty guidelines are used to determine program eligibility and are considered a simplified version of the poverty threshold (lecture). There are a few issues when it comes to measuring poverty in the USA. Schiller points out that our poverty measures exclude
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