Causes of Great Depression: Policies, Trade, Banking, and Commerce, Study notes of Financial Accounting

Download Causes of Great Depression: Policies, Trade, Banking, and Commerce and more Study notes Financial Accounting in PDF only on Docsity! C121 Explain (suggested length of 2–3 paragraphs) the major causes of the Great Depression (e.g., economic policies, trade concerns, banking practices, international commerce).  Causes of the Great Depression The Great Depression, which lasted from 1929 to 1939, was a severe worldwide economic depression that took place mostly during the 1930s. It was the longest, deepest, and most widespread depression of the 20th century. The causes of the Great Depression are multifaceted and interconnected, but can be broadly categorized into economic policies, trade concerns, banking practices, and international commerce. Economic Policies and Banking Practices One of the major causes of the Great Depression was the economic policies in place at the time. The Federal Reserve, the central bank of the United States, failed to prevent the collapse of the banking system. The Fed's tight monetary policy in the late 1920s and early 1930s, which aimed to limit lending and keep inflation in check, is often cited as a key factor. This policy led to a contraction in the money supply, which in turn led to deflation, a general decline in prices for goods and services.