How The Great Depression Affects The World Economy

Abstract This paper will be discussing the Great Depression; it will analyze the causes and the events that led to this depression, focusing on the role of Keynesian economics during that time. This article will briefly compare the 1920 downturn with the great recession and discuss the possibility of another depression affecting the world economy. The Great Depression The Great Depression was described as the deepest and longest-lasting economic downturn in the history of the industrialized world. It started in October of 1929 with the crash of the stock market, followed by direct effect on investments and consumer spending, soon the unemployment rates were at all-time high and half of the banking industry had failed. President Franklin Roosevelt had implemented reform measure that helped offset some of the damage, but relief came with the start of World War II in 1939, which jump started the economy ending the Great Depression (Depression, 2009). What were the root causes/events that led to the Great Depression Historians and economists still debate about the reasons behind the great depression, but research reveals some consistent and direct causes: 1- The crash of the stock market in 1929; the signs began earlier in the year when consumer spending dropped which caused an increase in undesired inventory; and so production slowed. At the same time, stock prices reached levels that could not be justified by anticipated future earnings. On October, 24 of 1929, the investorsShow MoreRelatedThe World s Economy Was Devastated1732 Words   |  7 Pagesworld’s economy was devastated. With the crash of the United States Wall Street, the realm drove into what is now known as the â€Å"Great Recession†. Its neighbour to the north, Canada also felt these affects as unemployment and poverty grew. 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