Economic Theory : The Great Depression

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When we look back through history we can find many opportunities to learn the lessons of economic theory but The Great Depression is a particularly relevant historical event when discussing economics. It is a defining event in the history of America as politics and economics intertwined, transforming the role of the federal government in the economy. Due to the length, severity and global effects an entire decade is known as the Great Depression. Theories continue to be debated on how or why the Depression took place and the reasons for its eventual end however, what most will agree on is that “The Great Depression (1929-39) was the deepest and longest-lasting economic downturn in the history of the Western industrialized world” ( Staff, 2009). Declines in consumer demand, financial panics caused economic output to fall in the United States. National output is essential in the field of macroeconomics and America’s decline was felt globally. The economic gold standard was a fundamental component in transmitting America’s downturn across countries (Britannica, 2015). The Great Depression, felt globally, is understood to have started in America during the fall of 1929. In October, the stock market crashed and fear hurled Wall Street into deep distress and millions of investors were ruined. The Great Depression hit an all-time low in 1933. At which point, 13 to 15 million Americans had lost their jobs, those lucky enough to still have a job were left underemployed
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