the causes of the great depression
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The causes of the great depression. Wait… what’s the great depression?. The great depression. Date: 1929-1939 Definition: a period of economic depression in the United States and the rest of the world

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the great depression
The great depression
  • Date: 1929-1939
  • Definition: a period of economic depression in the United States and the rest of the world
    • Economic depression occurs when an economy produces fewer goods and services and employs fewer people
  • Significance
    • Huge cost to human well-being
    • Transformed the role of the US federal government in people’s daily lives
five long term causes of the great depression
Five long-term Causes of the great depression
  • Monetary policy
  • Overproduction
  • Inequality
  • Speculation
  • Trade

Day 3

Day 1

Day 2

Day 4

overproduction
overproduction
  • In your notes: Is it possible for an economy to produce too much stuff? What might be the positive and negative consequences of producing too much?
market simulation
Market simulation
  • Some of you are producers – your job is to sell golf pencils (provided by me) for as much profit as possible
  • Some of you are consumers – your job is to buy golf pencils from the producers for as little money as possible
  • Some of you are observers – be ready to answer questions on the worksheet
round 1
round 1
  • One producer with one golf pencil to sell
  • Five consumers, with budgets of 20 cents each
round 2
round 2
  • Two producers with five golf pencils each
  • Five consumers with budgets of 20 cents each
round 3
round 3
  • Ten producers with ten pencils each
  • Three consumers, with budgets of 5-25 cents each
round 4
round 4
  • Two producers with five golf pencils each
  • Ten consumers
    • Eight consumers get two cents each
    • Two consumers get 50 cents each
round 5
round 5
  • Five producers with five golf pencils each
  • Ten consumers
    • Eight consumers get two cents each
    • Two consumers get 50 cents each
    • But consumers are going to get some bad news before buying begins…
basic economic principles
Basic economic principles
  • Prices are set by the combination of supply and demand
    • When demand > supply, prices go up
    • When supply > demand, prices go down
  • The balance of power depends on the distribution of wealth
    • When wealth is equally distributed, individual crises (like tuition or medical bills) don’t hurt the economy much
    • When wealth is heavily concentrated, a crisis for the rich means a crisis for the whole economy
overproduction in the great depression
Overproduction In the great depression
  • Agricultural overproduction
    • Farmers increased production significantly during WWI – and took on huge debts to do this
    • After WWI ended, demand fell sharply and farm prices crashed
    • Individual farmers kept production high, since profits were low
  • Similar problem in industry – factory methods made production increase, but eventually Americans ran out of money for new goods
inequality in the 1920s
Inequality in the 1920s
  • In the 1920s, the rich became far richer while the poor became only slightly less poor
  • Made worse by tax cuts for the rich under Herbert Hoover
  • Result: limited demand for consumer goods
exit ticket
Exit ticket
  • How did overproduction make the American economy unstable in the 1920s?
  • How did inequality make the American economy unstable in the 1920s?
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