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How Did The Great Depression Affect The Economy

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The Great Depression accelerated international gold standard termination. By dint of 1973, fixed exchange rates were neglected in favour of floating rates. In many nations, government regulation on financial markets were drilled frequently during the Great Depression. The United States, established the Securities and Exchange Commission in 1934 to regulate shares and market trading practices including foreign company financial instruments for instance; bonds and stocks. The commission until now, regulates share market to reduce inefficiencies and curb crimes like fraud and money laundering by enforcing acts like Money Laundering Control Act of 1986 to guarantee the transparency of global financial market in United States besides controlling …show more content…

Simultaneously, they were hammered by foreign investment negative flows, especially from the United States, due to its monetary contraction. Many countries, especially in South America, hiked their tariffs emulating United States Smoot-Hawley tariff of 1930 to be self-reliant economy which managed offset the depression effects, experience slow economic growth as they lost access to foreign markets led to unemployment in export-oriented sectors. Hence, global incomes fell due to reduction of global economy …show more content…

Keynes’s theory computed that government spending increment, tax cuts, and monetary expansion could offset depressions. The methodologies protected global economy from severe economy crisis such as the Great Depression itself to this day. Such effective control of domestic economy and financial system would attract investment from abroad due to financial and economy stability and at the same time, provide the nation with ample capital to exercise outbound foreign investment. The global trade was regulated to be in line with all nations. Gold standard was abandoned and replaced with fixed exchange for foreign currency exchange under the Bretton Woods Agreement. Many nations pegged their currency to United States dollar and international trade values are stated in terms of U.S. dollar so that it could be understood globally. After 1976, global monetary system exercises pure fiat money up to this moment. The growing unanimity that government should curb employment, created activist policies; government’s fiscal and monetary policies which encourages active participations in national economy to influence economy plans since the

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The New Deal, introduced by Franklin D. Roosevelt during the Great Depression, was a series of programs and reforms aimed at reviving the American economy. I firmly believe that the New Deal was a success and had a profoundly positive impact on the United States. By examining two significant New Deal programs, we can see how the New Deal successfully supported the economy and provided crucial relief to millions of Americans. One of the key programs of the New Deal was the Civilian Conservation Corps, which was designed to provide employment for young men and improve the nation’s natural resources. As Roosevelt described in his 1933 Fireside Chat, the CCC aimed to employ a quarter of a million unemployed men in forestry and flood prevention work, thus enhancing the value of natural resources while also relieving economic distress (Roosevelt, 1933).

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Finally, to ensure that a depression such as the one in 1929 never occurred again, the Securities and Exchange Commission was created in 1934 to regulate stocks. Furthermore, the Banking Act of 1935 appointed a new Board of Governors for the Federal Reserve System, instead of the private banking institution to watch interest rates. (Henretta,

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Consequently, European governments decreased unemployment benefits (Paxton, 1975) and offer more employments to encourage its citizens to become employed again (Parker, 2008). Secondly, the decrease in exports became higher than the decrease in imports after the accident. Therefore, governments had to take action devaluating their currencies to boost exports and to control the economic stagnation (Clavin, 2000), as well as they imposed deflationary policies such as exchange controls, protective tariffs and quantitative limits on imports (Erchengreen & Irwin, 2009). Not only it was clear that Europe experienced economic nationalism after the depression but it was even more certain when Germany suffered from an indebtedness to the United States due to the incapability of European banks to repay all the loans they have borrowed from the American bondholders.

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