In: Economics
ANS 3
A. The Great Depression was the economic slowdown of the decade of 1920s and still remains the biggest economic slowdown of the history.The causes of this slowdown are discussed here.The stock market crash of 1929 remains the major cause of great depression.In 1920 the US stock market had a historic expansion.It motivated other people to invest money in that but the people didnt had adequate knowledge of stocks. This resulted in the loss of consumer confidence and due to which the stock market fell drastically.The second reason was banking panics, during 1930 and 1932 the customers panicked a lot about their solvency in the banks ,so they withdrawed all the funds and deposits from the banks.The gold standard played the vital role in great depression,due to declining output and exports the United States was threatened by currency devaluation due to which its gold standards reduced.
B. New deal was the series was program initiated by president Franklin D Roosevelt to overcome the great depression.He said " only thing we have to fear is fear itself.”In first program he passed a bill that paid farmers to leave the work so that there would be no surpluses and to rise the prices.After this he gave the right to unionize to the workers so that they can demand for more wages.He passed major laws, including the Glass-Steagall Act and the Home Owners’ Loan Act.
In 1935 Roosevelt launched second new deal in which he created Workers Progress Administration, for the benefit of workers and to eradicate unemployment .He also passed National Labour relations act or the Wagnor act to seek the functionality of union elections.
C. The reforms that FDR pass to avoid great depression in future were implemented with congress, in august 1935 FDR signed social security act in which it guaranteed pensions to millions of Americans this would help to reduce poverty and would also create a reduction in income gap. FDR setup unemployment insurance and also asked the government that it should take care of unemployed and disabled people.