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Trace the causes of the Great Depression.
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Great Depression refers to a major and and long lasting slump in business and economic activities in the 1930's that affected most of the countries across the world. It caused a sharp fall in in world trade as each country tried to help its own industries by restricting imports.
The Great Depression occured because of the combined effect of multiple causes. This include the destruction and economic disruption caused by the World War I. In the United States, the failure of many banks during the 1920's also played a major part in this - about 550 U.S. banks failed from July 1, 1928, to June 30, 1929,. This was further aggravated by low incomes among farmers and factory workers. While factors like these set the stage for the depression, the actual event that precipitated the impending crisis was the New York stock market crash that occurred in 1929. This crash itself became inevitable because of the very high and unrealistic increase in the stock prices prior to the crash. Between 1925 and 1929 the average price of shares on the New York Stock Exchange more than doubled. This rise was totally out of proportion with any improvement in the economic activity.
Posted by krishna-agrawala on December 1, 2010 at 12:52 PM (Answer #1)
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