Great Depression in America Coursework Example | Topics and Well Written Essays - 2000 words

Great Depression in America - Coursework Example The basic cause of the Great Depression was a drop in aggregate demand, which led to a decrease in output as producers as well as merchandisers observed an unplanned increase in inventories. The sources of the reduction in spending differed during the course of the Depression, however, they cumulated into a massive drop in aggregate demand. During the Depression itself, different factions gave explanations regarding the catastrophe that goes contentedly with their personal interests. The Hoover management held global fiscal forces responsible and sought to â€Å"stabilize world currencies and debt structures†. ‘New Dealers’, aimed at finding a domestic solution to the catastrophe, said that the Depression was a calamity of ‘under-utilization’, that low earnings and high costs had made it extremely complicated to acquire the commodities of the industrial financial system; and that a shortage of demand had caused the financial slump.One of the earliest significant post-war explanations came was given by economists ‘Milton Friedman’ and ‘Anna Schwartz’, in their ‘Monetary History of the United States (1963)’. They argued about what has identified as the ‘economic interpretation’. Hey claimed that Great Depression was caused by a ‘radical contraction of the currency’ (Rothbard, 2011, p. 103). This argument goes well with the ideas that Milton Friedman has supported for several years.