The 'Great' Depression Flashcards
Prior to the stock market crash, the US economy entered a recession. When did this recession begin and how did production, prices, and income fare leading up to the crash?
The recession officially began in August of 1929.
The stock market crash began on October 24th, 1929.
From August through November of that year, production fell at an annual rate of 20%, wholesale prices at 7.5%, and personal income at 5%.
How much money was lost between the beginning of he stock market ‘crash’ and the 1st of November?
16 billion USD (nominal)
By mid-November, 30 billion USD (nominal) had been wiped out.
What institution is recognized as having been the largest single bank failure? How much did it have in deposits at the time of bankruptcy?
New York’s Bank of the United States
It had 200 million USD in deposits at the time
When did New York’s Bank of the U.S. fail?
December 1931
In January of 1932, Congress establishes the R.F.C. What does this acronym stand for and what was the purpose of such legislation?
The Reconstruction Finance Corporation was passed by Congress to serve as a lender of up to 2 billion USD to banks, insurance companies, building and loan associations, agricultural credit organizations, and railroads.
State the date on which FDR was elected?
November 1932
What was the unemployment rate before it began to climb towards 25%?
about 3%
In what years did the ‘peak’ and ‘trough’ of aggregate economic activity take place?
August 1929 was the peak.
March 1933 was the trough.
What was the peak-to-trough GDP contraction of the Great Depression?
What was it for the Great Recession?
From August 1933 through March 1933 GDP fell 30%.
From December 2007 through June 2009 GDP contracted 4.7%.
The Great Depression consisted of two business cycles.
Briefly describe each of the two cycles.
First Cycle:
- Contraction Phase
- Lasted 43 months, from August 1929 through March 1933. - Expansion
- Roosevelt is inaugurate March 1933 and implements New Deal policies
- Leads to an expansion lasting 50 months, from March 1933 to May 1937.
Second Cycle:
- Contraction
- Lasted a little over a year, from May 1937 through June 1938. - Expansion
- June 1938. Weak recovery with 17% unemployment in 1939.
Depression ends with the advent of the Second World War.
What ended the Great Depression?
Second World War
Even before the Japanese attack on Pearl Harbor brought the United States into the war in December 1941, the economy was gearing up for increase armaments production.
After the shock of Pearl Harbor, the US prepared for total war. WIth production supervised by government boards and driven by insatiable demands of the military for more guns, planes, and ships, real GDP almost DOUBLED between 1939 and 1944.
Unemployment dropped sharply, averaging less than 2% of the labor force in 1943-1945 and bottoming out at 1.2% in 1944.
