Model Question and Answers for APSC | What were policy instruments deployed to contain the great economic depression?
What were policy instruments deployed to contain the great economic depression?
Ans: The term "Great Depression" refers to the greatest and longest economic recession in modern world history. The Great Depression ran between 1929 and 1941, which was the same year that the United States entered World War II 1941. This period was accentuated by a number of economic contractions, including the stock market crash of 1929 and banking panics that occurred in 1930 and 1931.
Policy instruments deployed to contain the great economic depression:
In 1933, a new government led by Franklin D Roosevelt introduced the New Deal.
- It included financial support for farmers and a construction programmer to create more jobs, Banks were more closely regulated and savings were better protected
- Agriculture: Agriculture was facing a glut in prices. Farmers’ Relief Act was introduced to provide compensation to farmers for reducing output so that prices and wages would rise.
- One of the programs that aided in recovery from the Great Depression was a new set of construction projects that built dams and hydroelectric projects.
- Financial Reforms: To reduce speculative trading in shares of companies, credit-based investments were required to have a 50% down payment, up from the earlier 10%.
- In 1935, the United States Government passed the Social Security Act, which provided Americans with insurance and pensions for old age.
- With war looming on the horizon, the United States Government shifted its focus to strengthening the military infrastructure, despite maintaining an outlook of neutrality.
- The war finally came to American shores when Imperial Japan attacked Perl Harbor in December As a result, the nation's factories went back into full production mode
This expanding industrial production, as well as widespread conscription beginning in 1942, reduced the unemployment rate to below its pre-Depression level. The Great Depression had ended at last, and the United States turned its attention to the global conflict of World War II.