The Great Depression Overview

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Questions and Answers

What was a major consequence of the Wall Street crash?

Major losses for shareholders (correct)

Stabilization of the banking system

Increase in consumer demand

Rise in stock market speculation

Which factor contributed to the agricultural depression in the 1920s?

Increased agricultural production during the war

Rise in consumer purchasing power

Decrease in European agricultural exports

Excessive land purchases by farmers (correct)

How did overproduction in the USA contribute to the Great Depression?

Most industry shifted towards luxury goods

It resulted from increased consumer purchasing power

Many consumers could not afford goods (correct)

Markets in Europe were flourishing

What major shift in the economy occurred due to World War I?

Transition towards an oil-based economy Signup and view all the answers

What was one of the direct impacts of declining consumer demand?

Reduction in company production leading to layoffs Signup and view all the answers

How did the lack of banking regulations contribute to the Wall Street crash?

Encouraged massive speculation on stocks Signup and view all the answers

What role did the global trading system play in the Great Depression?

A decrease in demand in one country affected global economies. Signup and view all the answers

What was a consequence of bank runs during the Great Depression?

Individuals lost their savings due to bank closures. Signup and view all the answers

What was the purpose of the Agricultural Adjustment Agency?

To pay farmers for keeping part of their land uncultivated Signup and view all the answers

Which act increased tariffs in the United States in 1930?

Smoot-Hawley Act Signup and view all the answers

What was a major effect of deficit spending in Nazi Germany?

Unemployment decreased drastically Signup and view all the answers

What economic strategy did Nazi Germany pursue to reduce dependency on global trade?

Autarky Signup and view all the answers

How did the Great Depression impact militarist powers like Nazi Germany?

They could expand with little international opposition Signup and view all the answers

Which statement best describes U.S. policy during the Great Depression?

The U.S. adopted an isolationist stance Signup and view all the answers

What was a significant consequence of the withdrawal of U.S. capital after the Wall Street Crash?

Bankruptcy of CreditAnstalt in Austria Signup and view all the answers

What was a common characteristic of protectionist policies in the 1930s?

Raising tariffs to protect domestic industries Signup and view all the answers

What led to the public support of Nazi economic policies in the 1930s?

Reduction in unemployment Signup and view all the answers

What led to 'currency runs' during the Great Depression?

Economic uncertainty causing mass currency sales for gold Signup and view all the answers

Which approach did socialist Chancellor Hermann Mueller take to address unemployment benefits?

Decreased unemployment benefits Signup and view all the answers

How did governments try to maintain confidence in their currencies during the Great Depression?

By maintaining a balanced budget Signup and view all the answers

What change occurred in government policy under President Hindenburg and Chancellor Bruening?

Pursued deflationary policies through presidential decrees Signup and view all the answers

What was the purpose of deficit spending during the Great Depression?

To support social welfare and create new employment Signup and view all the answers

Which action was taken by U.S. banks following the Wall Street Crash?

Closed foreign bank accounts and restricted foreign loans Signup and view all the answers

What was a characteristic of the gold standard during the 1920s?

Fixed exchange rates tied to gold Signup and view all the answers

Study Notes

The Great Depression and its Impacts

Timeline: 1929-1939
Economic Indicators:
- Drastic decline in output
- Acute deflation
- High unemployment (25% in 1932 in US)
- Industrial production decline (47% US, 44% Germany, 37% in the rest of the world - excluding the Soviet Union)

Beginnings of the Depression

Agricultural Depression (1920s):
- Increased agricultural production after World War I, exceeding demand.
- Prices fell, leading to debt and crisis for farmers.
Overproduction in the USA:
- Consumer goods production exceeded consumer demand, leading to reduced purchases.
- Limited European markets caused domestic overproduction issues.
- Those who could afford goods did not buy as much as needed
Decline of Traditional Industries:
- Coal industry faced competition from oil, leading to reduced demand and profits.
- Textile industry declined, with less demand for traditional fabrics.
Wall Street Crash (1929):
- Stock market speculation created a bubble.
- Stocks lost almost half their value in two months, causing significant losses for investors.
- This led to banking crisis.

Impact on the Banking System

Bank Failures and Savings Loss:
- Bank closures resulted in loss of savings for many individuals and companies.
- Difficulty for businesses to obtain new loans.
- Following bank closures, banks faced intense pressure from customers to withdraw their deposits ("bank runs").
Consumer Demand Decline: - Stock market crash and bank failures led to reduced consumer confidence and spending. - Reduced consumer demand led to production cuts and job losses. - This formed a vicious cycle of reduced production, leading to further job losses and reduced consumer confidence.

Global Phenomenon

Global Interdependence:
- Global economic difficulties made countries interdependent, spreading crisis across the globe.
- If one country's economy falters, other economies are affected due to trade links, currency exchange, etc.
International Finance:
- European countries relied on US financing.
- The withdrawal of US capital after the crash severely affected the economies of many countries.

Possible Policy Solutions

Government Spending:
- Maintaining a balanced budget was a common idea, with opposing views on government intervention.
- Deficit spending (increased government spending to stimulate the economy despite potential deficits).
- Increased social welfare spending as measures to provide support to citizens This was viewed by many as critical.
FDR's New Deal (US):
- Programs aimed at providing relief for the poor, creating jobs, and stimulating the economy through increased infrastructure.
- Examples of government interventions for social welfare and new employment.
Impact on International Relations:
- The Global Depression caused difficulties in addressing international crises.
- Issues of protectionism and isolationism increased.
- Countries focused more on their own economic recovery.

Conclusion

The Great Depression was a major economic crisis that significantly affected the world's economies.
Loss of consumer confidence, bank failures, and declining trade were amongst the factors that negatively impacted economies around the world.
Measures taken to address economic crisis and recover include changes in government spending policies.

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Description

This quiz explores the Great Depression, covering its timeline, major economic indicators, and the events leading up to it. Understand the impact of overproduction, agricultural crises, and the decline of traditional industries during this pivotal period in history.