AP World HistoryPOD #25 – American Supremacy

Great Depression

Class Discussion Questions

McKay- “The Great Depression”, pp. 942-948

What were the underlying causes of the Great Depression?

By early 1929 economic prosperity and activity in most countries was beginning to decline

There was a large gap between real investment and stock market speculation

The stock market boom was built on borrowed money- buying on margin

As stock prices began to fall- lenders began to call in debts- this forced investors to sell stocks to pay off loans

Too many investors selling too many stocks too fast caused economic chaos

What was the trigger event of the Great Depression?

October 1929 stock market crash in the United States

How did the downward spiral expand and deepen the depression?

as the American economy began to collapse it triggered worldwide panic and the cycle repeated in other countries

stripped of wealth and confidence investors and the public started buying fewer goods

prices fell, production slowed, and unemployment rose

there was poor national planning

How did the Great Depression become and international event?

as the American economy began to collapse it triggered worldwide panic and the cycle repeated in other countries

What were the effects of the Great Depression? American lenders began recalling loans- gold reserves flowed

out of Europe and to the United States Banks began to crash around the world- especially in Europe Collapse in world prices as people began to liquidate industrial

goods and agricultural commodities to raise cash Output of goods declined by approximately 38% around the

world Protective tariffs were raised around the world Mass unemployment Unemployment produced a social powder keg

What was John Maynard Keynes counter-cyclical approach to ending the Great Depression?

proposed a “counter cyclical policy” in which he advocated an increase in government spending during economic downturn as a way to stimulate economic activity

governments should run large debt during depression (spend out of depression) and repay the debt during expansion cycles

What solutions did F. D. Roosevelt propose for ending the Great Depression?

FDR and the New Deal (United States) created a planned and regulated economy increased government spending on works

projects to provide work for the unemployed created social security programs to protect

the old, sick, unemployed Social Democrats created a middle way between sick

capitalism and cruel communism or fascism

When and how did the Great Depression end?

***The Great Depression did not completely end until the massive spending of World War Two

*** The recovery from the Great Depression completed the evolution of the welfare state