ECON 2200E Lecture 3: Econ test 3

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Chapter 10: 1929 1933 the great depression and hoover"s response: peak unemployment 25%, economy shrinking about 10% annually, prices fell. Historical explanations for the great depression: agricultural problems sharp decline in the price of agricultural goods domestically, and farmers found it difficult to repay their loans post wwi. It is unlikely that agricultural problems caused the great depression. First, if agricultural problems were a primary cause of the great depression, the. Depression would have started earlier in the 1920s. Second, we would have experienced nation-wide depressions during the second industrial. Revolution when farm prices were plummeting, but we did not: uneven distribution of wealth 1920s the rich became richer, but the standard of living also increased for the poor. Income gap grew as the gains to the rich outweighed the gains to the poor. Some argued the poor didn"t have enough money to spend on goods and services, which led to a decrease in firm investment and layoffs of workers.

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