The great recession that is known as the “Great Depression’ started in 1929 and continued until about 1933 in United States. This severe economic phenomenon that was originated in United States not only affected the USA economy but also shook the economy of almost all the countries of the world. This great depression led to severe decline in the real output, acute unemployment rate and consequently all the economic sectors and variables were negatively affected. As a result, the living standard of people declined at a high rate. Declines in consumer demand, financial panics, and misguided government policies caused economic output to fall in the United States. (Romer 1)
The Basic Characteristics of the Great Depression
Table 1
Year Nominal …show more content…
After 1933 the Real GDP as well as the Real GDP per Capita growth increased and the condition was recovered. Though we can see from the graph that the Real GDP and Real GDP per Capita of USA are fluctuating over time but the lowest peaks of Real GDP and Real GDP per Capita are in the Great Depression period which is one of the basic characteristics of the Great Depression. Inflation Rate: From the data Table 1 and the graph above, it is clear that the Inflation rate had its lowest peak during the Great Depression period in USA. After 1933 the inflation rate again had a sharp increase and since then has an almost stable condition. Though after the Great Depression the Inflation rate fluctuated but the fluctuation did not bring drastic change in the rate of Inflation as it did in the Great Depression …show more content…
There are other factors that caused the great depression in USA.
Stock Market Crash: In 1929, the Federal Reserve increased interest rates in order to slow down the rapid increase in stock prices. As a result the stock price declined. The stock market crash caused decline in the aggregate demand of USA. Consumer purchases of goods and services and business investment fell sharply after the crash as this financial crisis created uncertainty about future income. Therefore, the growth of production also declined. Thus the decline in stock prices caused the decline in production and employment in the United
The Basic Characteristics of the Great Depression
Table 1
Year Nominal …show more content…
After 1933 the Real GDP as well as the Real GDP per Capita growth increased and the condition was recovered. Though we can see from the graph that the Real GDP and Real GDP per Capita of USA are fluctuating over time but the lowest peaks of Real GDP and Real GDP per Capita are in the Great Depression period which is one of the basic characteristics of the Great Depression. Inflation Rate: From the data Table 1 and the graph above, it is clear that the Inflation rate had its lowest peak during the Great Depression period in USA. After 1933 the inflation rate again had a sharp increase and since then has an almost stable condition. Though after the Great Depression the Inflation rate fluctuated but the fluctuation did not bring drastic change in the rate of Inflation as it did in the Great Depression …show more content…
There are other factors that caused the great depression in USA.
Stock Market Crash: In 1929, the Federal Reserve increased interest rates in order to slow down the rapid increase in stock prices. As a result the stock price declined. The stock market crash caused decline in the aggregate demand of USA. Consumer purchases of goods and services and business investment fell sharply after the crash as this financial crisis created uncertainty about future income. Therefore, the growth of production also declined. Thus the decline in stock prices caused the decline in production and employment in the United