cafeconomics

The Great Depression of 1929 to 1933 is a landmark event in the economic history of the world. Till date many organizations use the stress scenarios of this event in building their economic models.  Let us examine the causes and effects of the Great Depression of 1929.  Causes of the Great Depression: A decline in the aggregate demand led to the Great Depression of 1929. A general loss of business confidence, stock market crash, gold standard, misplaced fiscal and monetary polices are cited as some of the reasons for the Great Depression.  Some the prominent causes are discussed below. 1. The Stock Market Crash 1929:  The Great Depression is a classic example of a correction in financial economy impacting the real economic activity. The stock market crash of Black Thursday, Oct 24, 1929 also called as the Great Crash caused a dent in the general business sentiment. This in turn led to decline in investment spending. The 'roaring twenties' during which many investors prospered