The Great Depression Shaped Economic Theory, Social Life, And People 's View Of A Market Economy

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The Great Depression shaped economic theory, social life, and people’s view of a market economy in general. The capitalist economic system seemed to be on the verge of collapse. Something drastic needed to be done in order to get society out of the depression. In his famous book, The General Theory of Employment, Interest and Money, Keyes attempted to show how economics and the market functioned and he proposed different approaches to creating government policy to guide the economy post war. Keynesian economists proposed that the way to escape the Great Depression was through a combination of two approaches. First to reduce interest rates. Second, the government should begin investing in infrastructure, which injects money into…show more content…
They believed that excessive saving was a problem for the overall economy, and would result in recession or even depression. When people save money it means that people are not spending, and when there’s not enough spending going on, the economy declines. By the end of World War II, many people were afraid that the economy would fall back into a depressive state like the 1930’s. On the contrary, the period between 1945-1973 was one of fast economic growth, leading it to be called the “Golden Age” of capitalism. The United States, as well as many other countries, was experiencing this rapid growth that lead to a worldwide boom. There were many elements that played a role in sustaining this boom. The first was the vast demand for goods that was created by people having higher wages and desired to buy more things with the money they had. The second was the fact that because of the war new technologies and products emerged. For example the use of the airplane as use for mass travel sustained the boom, by the creation of a whole new tourism industry. Along with these forces behind the Golden Age boom was the enlarged role of the government. The government played a central role in directing the postwar economy. One of the most important efforts was the planning and construction of a national highway system. This boosted interstate commerce and transformed America into the “car culture” it is today. New Deal policies along with an overall much
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