Great Depression Flashcards, test questions and answers

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What is Great Depression?

The Great Depression was a severe economic recession that occurred in the late 1920s and lasted through the 1930s. It was the longest, deepest, and most widespread depression of the 20th century. The effects of the Great Depression were far-reaching, with an estimated 25% of Americans unemployed at its peak. It caused massive hardship for individuals and families across the country, resulting in poverty and despair for many.The Great Depression was caused by a combination of events, including contractionary monetary policy from central banks and overproduction in certain industries. In addition to these factors, speculation on stock prices had become increasingly common during the roaring ’20s, leading to unprecedented levels of debt among investors when prices started to fall rapidly in 1929. This cascading effect resulted in massive losses for stockholders as well as banks who had extended loans based on these stocksand eventually spread throughout all sectors of the economy.By 1933, industrial production had fallen by more than 50% compared to 1929 levels while unemployment reached an estimated 25%. The economic downturn caused businesses large and small to fail while wages plummeted across all industries. Farmers suffered greatly due to falling crop prices; cities were particularly hard hit due to high rates of unemployment; consumer credit dried up; investment activity dropped dramatically; and people began defaulting on mortgages or repatriating their assets back home (in some cases). Many individuals were forced into homelessness or otherwise unable to provide basic necessities for their families without assistance from relief programs like those put into place by President Franklin D Roosevelt’s New Deal legislation.Though some economists disagree about what actually ended itwith opinions ranging from deficit spending under FDR’s New Deal policies to increased government interventionit is generally accepted that World War II was a crucial factor in ending the Great Depression due both its stimulating effect on national economies as well as providing employment opportunities overseas during wartime service abroad. Eventually there was an upswing in manufacturing output which boosted employment numbers before full recovery did not occur until after 1945 when WWII came to a close.