Factors Which Caused The Great Depression Economics Essay

In this undertaking, our purpose is to explore/analyse the factors which caused the Great Depression and how some European economic systems recovered from the deep recession during 1930s. First we will be analyzing how the great depression began in the United Stated and migrated to Europe in the early 1930s. The research states which we have chosen to concentrate on are France, Germany and Great Britain due to the changing effects of the Great Depression on each of the three super powers, excepting USSR.

Germany was affected by the Great Depression dramatically where the unemployment rate rose above 30 % , likewise Great Britain unemployment rates rose up to 25 % of the labour force. The employment degrees in the basic industry such as coal and steel had experienced a bead, due to the addition in ingestion of lasting goods. France was non impacted greatly by the depression until 1932, where a little addition in the unemployment degree was witnessed in comparing to Germany and Great Britain.

Secondary Research was conducted to happen out the chief causes of the Great Depression and the recovery procedure. The secondary research is chiefly about ( aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦aˆ¦ … . )

It is significantly of import to research and survey of Great Depression in Europe because John Maynard Keynes led a revolution in economic thought. He argued that Great Depression was caused by under ingestion due to a deficiency of assurance in the market. Therefore consumers thought that they could avoid losingss by go outing the market, as there is no escape of money, it will ensue in recession and lead to the Great Depression. Besides, there were many different positions on how did Great Depression started in Europe such as Keynesian position and Monetary point of position. By understanding different point of position, it helps economic experts to undertake existent universe jobs.

1.1 Background

The Great Depression did non get down as a “ Depression ” , it was viewed as a cyclical recession. In Europe the effects of the Great depression were experienced in 1929, and began to lessen during 1939 ; nevertheless some states experienced long term effects from the depression. The 1929 depression was a world-wide economic lag after World War I which had dramatically affected the planetary economic system. The epicenter of the Great Depression was the United States, which led to European states such as Great Britain, Germany and France to hold a knock-on consequence.

In Europe, many states experienced a autumn in end product degrees. As end product reduces, outlooks of deflation causes consumers to cut down ingestion. Hence the demand of goods and services reduces which besides raise the unemployment degree. The Great Depression besides led to Banking Crisis because the decrease in monetary values made it hard to refund the loans. Therefore houses will happen it hard to obtain external recognition hence that end product will further cut down.

There were several myths on the causes of the Great Depression in 1929. One of them was the Wall Street stock market clang, which was assumed to be the ground of the Great Depression ; nevertheless the Wall Street clang was non the chief causes of the Great Depression, it contributed towards the depression. The existent causes of Great Depression can be divided into four parts which is alterations in the competition of production, operation of labor markets, alterations in the international colony forms and alterations in the operation of international pecuniary system. The alteration in the international colony form where international trades have switched from Great Britain to United States. The alterations in the composing of production and the nature of the international pecuniary system have besides contributed to the Great Depression due to the diminution of universe trade makes it hard to change economic policies. The monetarist argued that the Great Depression occurred because the Federal Reserve did non increase the money supply to cut down the deflation. The Federal Reserve had increased the base rates which caused a psychiatrist in the money supply, which leads to a autumn in ingestion, ensuing in a decrease aggregative demand.

The European states such as Great Britain, Germany and France started to see the Great Depression chiefly because of international debt. After World War I, US Banks were owed loans from most European states. The high duties from the US and the lag in the US economic system made it hard for the European states to pay back the loans. As the US authorities refused to take down the refunds, European states had to borrow more in order to pay back the debt. When the Great Depression started to happen, the US Bankss recalled their loans, as the escape of money in the European states was significantly high, these economic systems started to see the effects of a deep recession.

The effects of the Great Depression was minimised in the UK when they left the Gold Standard in 1931. This lead to an addition in the fight of the UK exports as the authorities were able to deprecate their ain currency. When the value of the exchange rate is low, exports from the exporting state will be comparatively cheaper to the state buying the good, therefore increasing employment chances for the exporting state.

hypertext transfer protocol: //www.canbekeconomics.com/research_papers/The_Great_Depression_and_Europe.pdf

hypertext transfer protocol: //www.uwosh.edu/llce/conted/lir/course-listings/The % 20Great % 20Depression.pdf

hypertext transfer protocol: //economics.about.com/od/recessions/a/greatdepression_2.htm

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