Great Depression

In the 1930s, there was an economic despair in the world. It was the deepest, longest depression in the 20th century. This caused global economy to decline.

The United States was where the depression originated. The downfall of market prices of the stock in the U.S. was said to be the main cause of Great Depression. This caused the world GDP to fall. The depression affected both the poor and rich countries alike. Prices dropped and tax, revenue and personal income were affected by it.

There was a reduction in both investment spending and consumption. This was caused by loss of confidence. Prices dropped and holding cash became profitable. The Great Depression was believed to have started as a normal recession and this recession grew into Great Depression after the decline of money supply.

In 1933 there was recovery. In the U.S., the economy did not go back to its former state. International gold entries which caused cash supply growth helped to end the depression.

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