PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
7th Edition
ISBN: 9781264088980
Author: Frank
Publisher: MCG
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Textbook Question
Chapter 4, Problem 1RQ
How did the experience of the Great Depression motivate the development of the field of
Expert Solution & Answer
To determine
Determine whether the experience of the Great Depression motivates the development of the field of macroeconomics.
Explanation of Solution
The field of macroeconomics is dealing with wide economic phenomena such as inflation, price level, economic growth rate, national income, GDP, and unemployment changes, and so forth. The Great Depression had badly affected the field of macro economy . This is because during the 1930s, Country U suffered due to the depression owing to several reasons. They are unequal distribution of wealth, high tariff and war debts, stock market crash, and financial panic, and overproduction in the economy. The main reason for the Great Depression was the stock market crash. In this time, most banks performed poorly and also government did not show any seriousness in solving the crisis. This made the economic activities to go on in a poor manner. Also, this led the economy to increased unemployment, hunger, poverty, and so forth.
However, the Great Depression motivated the development of macro-economic field. To overcome the depression, the government implemented many relief programs such as Civilian Conservation Corps (CCC), Works Progress Administration (WPA), the Tennessee Valley Authority (TVA), the Securities and Exchange Commission, and the social security scheme. However, the depression taught about the importance of monetary stability, high tax rate avoidance, balance trade, and price control for a good economy.
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PRINCIPLES OF MACROECONOMICS (LL)W/ACC.
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