Topic: What were the causes of the Great Depression of the 1930s? Is today’s economic situation similar? Discuss.
The Great Depression occurred on 1930s made a huge destroyed impact to all of global economic entities. With economic theory developing, nowadays, economists are able to prevent economic depression or recession by using Macroeconomic knowledge. The report that following is completely based on economic principles and theories from textbook. The purpose of the paper is more than just analysis the causes of Great Depression, additionally, comparing today’s economic situation to that of 1930s, predict will economic depression occur again? If do so, how do we prevent it. The paper firstly will discuss and summarize couples of Macroeconomic theory relevant to economic depression or recession, which mainly from textbook. Then, comparing to current economic situations, using some statistic data from Internet. Finally. Discussing whether current situation similar with that of 1930s, if they are similar, how do we prepare to do to prevent; if do not, how do we make it go smoothly.
Fiscal policy is the use of government taxation and expanding to influence variable of economy which including: * Aggregate demand and the level of economic activity
* The pattern of resource allocation
* The distribution of income
Monetary policy is processed by which the national central bank of a country control the money supply, the policy often target the interest rate for the purpose of improving economic growth and stability. The goals associate with stable price and low unemployment. The major way monetary authority using are Expansionary and Contractionary policy, where expansionary policy increases money supply, and contractionary policy expand money supply more slowly. The expansionary policy usually is used to fight with high unemployment and stimulating business...