A time of low economic activity, which is followed by a high level of unemployment.
Kim Appleby
The Great depression is an example of economic depression:
The Great Depression was a dramatic, worldwide economic downturn beginning in some countries as early as 1928. The beginning of the Great Depression in the United States is associated with the stock market crash on October 29, 1929, known as Black Tuesday. The depression had devastating effects in both the industrialized countries and those which exported raw materials. International trade declined sharply, as did personal incomes, tax revenues, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. http://www.econmacro.com/images/urdep.png http://en.wikipedia.org/wiki/Great_Depression
Tyler Bannerman
How Have Most Recent Depressions Been Solved?
The Great Depression hit the whole world incredibly hard. At the time, the world economies had been based on the ideas of Keynes. The United States and The United Kingdom were both following the ideas of Keynes and following the Fiscal Policy along with the Strategy of Deficit Financing. Fiscal Policy uses taxation and government spending to influence the economy and runs opposite to the business cycle. Deficit Financing was the practice of the government spending more money, and collecting revenue through borrowing. When the times were bad the government would spend lots of money and cut taxes to stimulate the demand. When times were good the government would spend far less and increase the taxes. The problem with this economic strategy was that neither the United States or the United Kingdom could repay this money they kept borrowing, causing their economies to sink lower and lower.
When both Ronald Reagan and Margaret Thatcher came into power in (respectively) the United States and the United Kingdom they had been observing the struggling economies under keynes' ideologies. So they introduced Hayek's idea of the Monetary Policy. The government would regulate the money supply, and change interest rates to stabilize spending, and in-tern, stabilize the economy.
Kim Appleby
The Great depression is an example of economic depression:
The Great Depression was a dramatic, worldwide economic downturn beginning in some countries as early as 1928. The beginning of the Great Depression in the United States is associated with the stock market crash on October 29, 1929, known as Black Tuesday. The depression had devastating effects in both the industrialized countries and those which exported raw materials. International trade declined sharply, as did personal incomes, tax revenues, prices and profits. Cities all around the world were hit hard, especially those dependent on heavy industry.
http://www.econmacro.com/images/urdep.png
http://en.wikipedia.org/wiki/Great_Depression
Tyler Bannerman
How Have Most Recent Depressions Been Solved?
The Great Depression hit the whole world incredibly hard. At the time, the world economies had been based on the ideas of Keynes. The United States and The United Kingdom were both following the ideas of Keynes and following the Fiscal Policy along with the Strategy of Deficit Financing. Fiscal Policy uses taxation and government spending to influence the economy and runs opposite to the business cycle. Deficit Financing was the practice of the government spending more money, and collecting revenue through borrowing. When the times were bad the government would spend lots of money and cut taxes to stimulate the demand. When times were good the government would spend far less and increase the taxes. The problem with this economic strategy was that neither the United States or the United Kingdom could repay this money they kept borrowing, causing their economies to sink lower and lower.
When both Ronald Reagan and Margaret Thatcher came into power in (respectively) the United States and the United Kingdom they had been observing the struggling economies under keynes' ideologies. So they introduced Hayek's idea of the Monetary Policy. The government would regulate the money supply, and change interest rates to stabilize spending, and in-tern, stabilize the economy.