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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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