Question

What were the causes of the Great Depression? ( I want the answer computer typing NOT handwriting)

Answer 1

Causes of great depression:

Great depression spanned between 1929 and 1939 which caused huge damage to world economies, especially US economy. It produced unemployment and deflation. Following were causes of great depression:

• Crash of stock market: Many firms listed in stock exchanges posted very dismal results and it lost confidence and faith of public in firms. Investors withdrew their money and market crashed immensely. It was called black Monday.
• Bank run: over 700 banks went bankrupt in firm ten months of 1930. There was huge bank run and people were standing in long queue to withdraw their savings. Numerous people lost their savings.
• Monetarist holds that great depression was caused by the disproportionate rise in supply. Federal Reserve could not increase supply sufficiently. And it caused depression and fall in demand.
• Keynes does not agree with Monetarist explanation and contends that great depression was caused by the fall in aggregate effective demand. Negative business sentiments and deflation further exacerbated problem of depression.
• Drought condition in USA: US agricultural sector was facing drought, thus agricultural output had fallen and farmers were unable to pay off debts.