GRAND RAPIDS COMMUNITY COLLEGE
EC 251 PRINCIPLES OF MACROECONOMICS
THE GREAT DEPRESSION AND THE GREAT RECESSION PROJECT
The financial collapse that precipitated the Great Depression and the financial collapse that precipitated the Great Recession occurred almost exactly 80 years apart. The chain of events that constituted the run-up to the Great Depression was almost exactly mirrored in the run-up to the Great Recession. That would indicate that we either failed to learn some very important lessons from the 1920’s or that we ignored them in the 2000’s. Programs that are the legacy of the Great Depression prevented the 2008-2009 economic collapse from reaching the dimensions of the 1930’s economic implosion in the U.S. However, failure …show more content…
*Identify four (4) economic trends or events that preceded the Great Depression of the 1930’s and their mirror images in the precursors to the Great Recession, and explain how they set in motion the negative multiplier process that reduced income, employment, and aggregate demand.
Technology
-The Great Depression had negative increase in their output. Growth in labor was down and that included technology also. Stocks from capital went south. Wages and employment decreased as the productivity of firms decreased. This also resulted in a decrease in demand for labor. The lower the productivity, the less investments in machinery and factories. Less factories equal less workers/jobs. So the missing factories and machinery resulted in less technology because there was nowhere to build them. Not only that, businesses didn’t have the money, for parts, to put the technology together.
Unemployment
-Black Tuesday was born. Stock markets had crashed. Income decreased, as well as trading. Since there was no income coming in, no taxes could be collected. Unemployment, 25% at the time, dominated during this saga. That 25% was equivalent to 15 million workers in the United States. This tragedy effected England, as well as Canada. Canada’s unemployment rate rose to a whopping 30%. Banks began to close, and that adds onto the unemployment …show more content…
The “too big to fail” theory states that main corporations, such as financial institutions, are so popular that failing, would cause a negativity factor to the greater economy. Governments need to step on the verge of failing. Eric Holder, an attorney, testified to the Senate Judiciary Committee that the size of large financial institutions has made it difficult for the Justice Department to bring criminal charges when they are suspected of crimes, because such charges can threaten the existence of a bank and therefore their interconnectedness may endanger the national or global economy. Richard Fisher, Federal Reserve Bank of Dallas President, brought to the table the idea of breaking larger banks into smaller
EC 251 PRINCIPLES OF MACROECONOMICS
THE GREAT DEPRESSION AND THE GREAT RECESSION PROJECT
The financial collapse that precipitated the Great Depression and the financial collapse that precipitated the Great Recession occurred almost exactly 80 years apart. The chain of events that constituted the run-up to the Great Depression was almost exactly mirrored in the run-up to the Great Recession. That would indicate that we either failed to learn some very important lessons from the 1920’s or that we ignored them in the 2000’s. Programs that are the legacy of the Great Depression prevented the 2008-2009 economic collapse from reaching the dimensions of the 1930’s economic implosion in the U.S. However, failure …show more content…
*Identify four (4) economic trends or events that preceded the Great Depression of the 1930’s and their mirror images in the precursors to the Great Recession, and explain how they set in motion the negative multiplier process that reduced income, employment, and aggregate demand.
Technology
-The Great Depression had negative increase in their output. Growth in labor was down and that included technology also. Stocks from capital went south. Wages and employment decreased as the productivity of firms decreased. This also resulted in a decrease in demand for labor. The lower the productivity, the less investments in machinery and factories. Less factories equal less workers/jobs. So the missing factories and machinery resulted in less technology because there was nowhere to build them. Not only that, businesses didn’t have the money, for parts, to put the technology together.
Unemployment
-Black Tuesday was born. Stock markets had crashed. Income decreased, as well as trading. Since there was no income coming in, no taxes could be collected. Unemployment, 25% at the time, dominated during this saga. That 25% was equivalent to 15 million workers in the United States. This tragedy effected England, as well as Canada. Canada’s unemployment rate rose to a whopping 30%. Banks began to close, and that adds onto the unemployment …show more content…
The “too big to fail” theory states that main corporations, such as financial institutions, are so popular that failing, would cause a negativity factor to the greater economy. Governments need to step on the verge of failing. Eric Holder, an attorney, testified to the Senate Judiciary Committee that the size of large financial institutions has made it difficult for the Justice Department to bring criminal charges when they are suspected of crimes, because such charges can threaten the existence of a bank and therefore their interconnectedness may endanger the national or global economy. Richard Fisher, Federal Reserve Bank of Dallas President, brought to the table the idea of breaking larger banks into smaller