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?

<p>Transition towards an oil-based economy (B)</p> Signup and view all the answers

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

<p>Reduction in company production leading to layoffs (A)</p> Signup and view all the answers

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

<p>Encouraged massive speculation on stocks (B)</p> Signup and view all the answers

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

<p>A decrease in demand in one country affected global economies. (C)</p> Signup and view all the answers

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

<p>Individuals lost their savings due to bank closures. (B)</p> Signup and view all the answers

What was the purpose of the Agricultural Adjustment Agency?

<p>To pay farmers for keeping part of their land uncultivated (D)</p> Signup and view all the answers

Which act increased tariffs in the United States in 1930?

<p>Smoot-Hawley Act (A)</p> Signup and view all the answers

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

<p>Unemployment decreased drastically (A)</p> Signup and view all the answers

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

<p>Autarky (D)</p> Signup and view all the answers

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

<p>They could expand with little international opposition (D)</p> Signup and view all the answers

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

<p>The U.S. adopted an isolationist stance (D)</p> Signup and view all the answers

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

<p>Bankruptcy of CreditAnstalt in Austria (C)</p> Signup and view all the answers

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

<p>Raising tariffs to protect domestic industries (B)</p> Signup and view all the answers

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

<p>Reduction in unemployment (D)</p> Signup and view all the answers

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

<p>Economic uncertainty causing mass currency sales for gold (B)</p> Signup and view all the answers

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

<p>Decreased unemployment benefits (D)</p> Signup and view all the answers

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

<p>By maintaining a balanced budget (D)</p> Signup and view all the answers

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

<p>Pursued deflationary policies through presidential decrees (A)</p> Signup and view all the answers

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

<p>To support social welfare and create new employment (A)</p> Signup and view all the answers

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

<p>Closed foreign bank accounts and restricted foreign loans (A)</p> Signup and view all the answers

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

<p>Fixed exchange rates tied to gold (C)</p> Signup and view all the answers

Flashcards

Deficit Spending

Government spending more money than it collects in taxes, often to stimulate the economy.

Free Trade

A system where countries reduce tariffs and encourage international trade to boost economic growth.

Protectionism

A policy that aims to protect domestic industries by raising tariffs on imports.

Autarky

A nation's policy of economic self-sufficiency, aiming to reduce dependency on the global economy.

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U.S. Isolationism

The U.S. policy of avoiding political and economic involvement in international affairs.

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Imperialist Agenda

A policy of aggressive expansion and conquest by a nation, often driven by militaristic ideologies.

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FDR's New Deal

The economic policies implemented by President Franklin D. Roosevelt in response to the Great Depression.

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The Great Depression

The period of severe economic downturn that affected the world in the 1930s.

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Currency Runs

The Great Depression led to a wave of people exchanging their currency for gold, often due to a loss of faith in the value of paper money.

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Gold Standard

A system where currencies are pegged to a fixed amount of gold, providing stability in exchange rates.

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Balanced Budget Policy

When governments prioritize balancing their budgets to avoid inflation, often through cuts in government spending and wages.

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Deflationary Policies

To prevent currency devaluation and attract foreign capital, countries would cut government spending and services, and increase taxes.

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Withdrawal of U.S. Capital

The U.S. withdrawal of capital from foreign markets after the Wall Street Crash led to a global financial crisis.

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Restricted Foreign Loans

Banks restricted foreign loans during the Great Depression, hindering international trade and investment.

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Collapse of Credit-Anstalt

The collapse of Credit-Anstalt, Austria's largest bank, in 1931, triggered a wave of bank runs across Europe.

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Agricultural Depression

A major cause of the Great Depression that involved farmers producing more goods than the market could consume, leading to falling prices and heavy debt burdens.

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Overproduction

The phenomenon of businesses producing more goods than consumers could buy, leading to a surplus and declining prices during the Great Depression.

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Wall Street Crash

The crash of the US stock market in 1929, marking the beginning of the Great Depression. It was caused by overspeculation, stock market bubbles, and lack of regulation.

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Buying Stocks on Margin

A financial strategy during the Great Depression where individuals and businesses invested in stocks with borrowed money, amplifying potential gains but also leading to significant losses during the crash.

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Bank Runs

The situation during the Great Depression when banks faced a surge of withdrawals by customers due to fears of instability and financial loss. It led to bank closures and furthered the economic crisis.

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Global Impact of the Great Depression

The global impact of the Great Depression, caused by interconnected financial systems and international trade. A decline in demand in one country led to a ripple effect in other countries.

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Decline in Consumer Demand

The reduced consumer spending during the Great Depression due to financial losses and fears of economic uncertainty, further exacerbating the decline in production and job losses.

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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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The Great Depression And Its Impacts PDF

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.

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