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By 1932 when Franklin Roosevelt became president there was definitely a need for a new deal to stop the American economy from reaching rock bottom.

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By 1932 when Franklin Roosevelt became president there was definitely a need for a new deal to stop the American economy from reaching rock bottom. By this time the affects of the depression had been going on for three years, something was needed to stop the economy from slipping any more and bring it back up to provide jobs, higher wages and a better standard of living. By some people the blame for the American depression is not upon Herbert Hoover but would have happened no matter who was president. It has been proven that the level of business activity veers from high to low taken the overall economy with it. ...read more.


- these terms were developed by a American economist Wesley Mitchell who studied the depression in great detail. During a period of prosperity or boom a rise in production becomes takes place. Employment, wages, and profits increase according to the level of boom. Businessmen express their optimism through investment to expand production. However, obstacles begin to occur that slow down further expansion. For example, production costs increase, shortages of raw materials may further hold back production, prices rise and consumers react to increased prices by buying less. As consumption starts to lag behind production, stock mount up, causing a price decline. ...read more.


Employment increases, providing some additional money into the economy. Investment in capital-goods industries expands. As optimism enters the economy, the desire to speculate on new business ventures returns. A new cycle is under way. After the great depression, devices have been built into most economies to help prevent severe business declines. For instance, unemployment insurance provides most workers with some sort of income when they are laid off. Social security and pensions paid by many organizations provide some income to the increasing number of retired people. Although not as powerful as they once were, trade unions remain an obstacle against the collective wage drop that aggravated previous depressions. Schemes to support crop prices (such as the European Common Agricultural Policy) shield farmers from disastrous loss of income. ?? ?? ?? ?? ...read more.

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