The Great Depression Research: Problem 1930 to 1931 (Essay Sample)
Required to write a three-part essay upon the actual data for the Great Depression. The essay should utilize the macroeconomics theory(s) you learn in your reading(s) in order to explain the changes which occurred during this fascinating episode of U.S. history.
The Great Depression
Problem 1- 1930 to 1931
In the period 1930 to 1931, the unemployment rate increased from 8.7% to 15.9% while the consumption expenditures were $71 and 61.3 for the two years. The rise in unemployment in the US and other advanced countries during the Great Depression occurred at a time when the increase in labor force was low, with output reducing as unemployment rose (Solomou and Martin Weale R53). The implication of this is that there was higher unemployment and the economy further contracted with lower consumer expenditure, as it is part of the aggregate demand. Even though, the federal government expenditure increased for $ 3.4 to 3.6, the difference was marginal, while the fall in federal government revenue $ 4.1 against $ 3.1 indicates that there was slowed down economic activities as higher revenues indicate that the government could get higher revenue and multiple sources of economy. The slowdown in the economy was further worsened by the number of banks being fewer that they could not provide loans to the public. At the same time, the production worker wage rates fell from $ 0.552 to 0.515. The wholesale prices excluding farm and food also declined from $ 85.2 to $ 75.0 indicated that there was deflation and even this did not result in higher consumer demand as consumers were worse off when the Great Depression with fewer money and they were more likely to be unemployed compared to the 1920’s
Problem 2- 1929-1930
The output growth, unemployment rate and the inflation are the three main indicators of the health of the economy (Blanchard and Johnson 7). The price deflator declined from 1929 to 1931 indicating that the consumer price indicating that the inflation rate declined over this period. The unemployment rate in 1930 was 8.7% in 1930 higher than 3.2% in the previous year indicating that more people were out of jobs with no source of income. Higher unemployment rates indicate economic distress as output fell and the employers could not pay workers when consumer demand was low as production also declined. It is no surprise that the wage rates declined as production fell as the employers could not match the higher wages at a time when there were few job opportunities and the economy had contracted. Since the GDP depends on consumer expenditure, investments government expenditure and net exports, this can be calculated using the federal government expenditure and consumption expenditure. In 1929 the GDP was $ 95.80 while the consumption expenditure was $ 79 and government expenditure was $ 3.30, and the investments is $ 13.50 (95.80-($79+$ 3.3). In 1930 the investments was $ 8.20 ($82.60-($74.40+$8.20). This is based on the assumption that the net exports figure are not available.
Problem 3- 1931-1932
In the years 1931 to 1932, the national income deflator further declined from $ 85 to $ 77 indicating that the average level of prices declined as the Great Depression further affected the country. Taking into consideration the national income and higher unemployment levels, the industry cutoffs were associated with deflation, while the industrial production was low. This is consistent with the observation as the income plunged, prices also fell when there was decline in economic activities. The period preceding the Great Depression was characterized by boom years and expansionary polices and as the interest rates this worsened the economic situation when there was an economic bust during the depr...
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