Running head: THE GREAT DEPRESSION
The Great Depression
THE GREAT DEPRESSION
Why the Great Depression was Negative
The Great Depression began in the late 1920s and extended to the 1930s. It is considered
the most severe and longest economic downturn in modern history after lasting for a decade. It
affected almost every country globally and is attributed to have led to massive declines in mass
unemployment, industrial production, banking and sharp increases in homelessness and poverty.
The effects of the depression highly impacted the United States because most its economic
sectors encountered challenges. This paper will examine the causes and adverse impacts of the
Causes of the Great Depression
The depression could be attributed to the crashing of the stock market.. In the 1920s,
stock prices rose significantly and this attracted a lot of people across the U.S to invest in the
stock because returns were assured. Many people including the low and middle class income
earners mortgaged their home or used all their disposable income to buy stock. Most of the
shares bought were financed by loans that attracted interest. However, share prices began to
decline in October 1929 and this caused panic amongst shareholders. Most rushed to liquidate
their stock and this led a more profound decline of stock prices by 33 percent (Editors, 2009). As
a result, the stock market crashed and this led to reduced industrial output, reduced investment,
decline in consumer spending and job losses hence occasioning the Great Depression.
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