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Why Did The Great Depression Get So Bad

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1. Why did the Great Depression get so bad? Describe 2 reasons.
What were two ways the New Deal tried to address the Depression.

The Great Depression was a severe economic crisis that began in 1929 and lasted for over a decade. This led to people losing faith in the American economic system and left about 25% of Americans unemployed. The Great Depression got so bad because of a series of policy errors made by the Federal Reserve and the failure of the banking system.

The Federal played a major role in the Depression as it cut the money supply and raised interest rates due to the gold standard. This led to the market crash of 1929 which triggered a chain reaction that caused many businesses to fail and led to widespread unemployment. Additionally, the failure of the banking system coupled with the crash and inaction from the Federal Reserve made the Depression worse. There was a wave of bank failures due to many banks being unable to withstand the economic pressure. People run to banks to withdraw their savings out of fear that the bank would fail because, at the time, the Federal Deposit Insurance Corporation did not exist. As banks failed, people lost their savings, and credit became scarce, making it difficult for businesses to get the loans they needed to operate. The policy errors and bank failures elevated the severity of the Great Depression as faith in the economic system was lost and the unemployment rate was at its …show more content…

Roosevelt introduced the New Deal, which was a series of policies and programs designed to stimulate the economy and provide relief to those who were suffering. The New Deal fought to rejuvenate the economy and restore the faith of the people in the American economic system. It gave people hope and a foundation for the economy to begin its recovery. The New Deal tried to address the depression through the creation of public works projects and the establishment of social welfare

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