Response to Discussion Questions

RESPONSE TO DISCUSSION QUESTIONS 1

Responseto Discussion Questions

Bankruptcies andhigh employment rates at the time of Great Depression of 1930striggered a dramatic increase in the government intervention on theUnited States’ economy.

What was theoriginal intent of the government intervention? It is clear that theoriginal intent from the government was not to provide for thoseindividuals affected by the Great Depression. It was hard to clearlyunderstand why this depression had occurred. This is because thecountry was, at the time, been blessed with abundant resources,skilled labor, and a productive industry (American StudiesAssociation, 2010). Yet still, the depression engulfed the Americanpeople. The government’s original intent aimed at controlling itsresources to the people, while setting the standards within theAmerican market. It is still difficult what could have happened ifthe depression had gotten worse.

What were themost significant micro- and macroeconomic effects of the U.Sgovernment intervention? Micro- and macroeconomic effects that resultin the government’s intervention stemmed from a potential financialcrisis that had loomed at the time. The most significant one would bedrawn from the fact that the government opted to borrow more money todump it into the economy (International Labor Office, 2010). Here,what could have happened is that the country being immersed into moredepth, and financial crisis would have worsened.

Why? This isbecause it is true that the significance of micro- and macroeconomicswould have led to ignorance on the country’s economic principles.To think about what could have happened, means that the country andits people would have also faced vicious cycle of depression (NBER,2011). Taxes on business would have also stifled investments on theprivate sector. Environmental uncertainty would also mean morecrises.

References

American Studies Association (2010). Encyclopedia of Americanstudies. Baltimore, Md.: Johns Hopkins University Press.

International Labor Office (2010). American labor and the GreatDepression. International Journal of Labor 2, 1.

National Bureau of Economic Research (2011). The Great depression.Cambridge, MA: National Bureau of Economic Research.