What reason might Temin give to support his argument that what happened to the economy following the crash of 1987 is evidence against the crash of 1929 being an important shock to the economy? A. Economic conditions were more severe after the crash of 1987 because the decline in the market was twice as large as in 1929. B. Economic conditions were more severe after the crash of 1929 even though the decline in the market in 1987 was twice as large as the decline in the market in 1929. C. The market decline in 1929 was twice as large as the market decline in 1987. D. The market decline in 1987 was twice as large as the market decline in 1987.

Question

Philip Gray

Business

27 September, 12:27

What reason might Temin give to support his argument that what happened to the economy following the crash of 1987 is evidence against the crash of 1929 being an important shock to the economy? A. Economic conditions were more severe after the crash of 1987 because the decline in the market was twice as large as in 1929. B. Economic conditions were more severe after the crash of 1929 even though the decline in the market in 1987 was twice as large as the decline in the market in 1929. C. The market decline in 1929 was twice as large as the market decline in 1987. D. The market decline in 1987 was twice as large as the market decline in 1987.

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Jermaine · Answer 1

B) Economic conditions were more severe after the crash of 1929 even though the decline in the market in 1987 was twice as large as the decline in the market in 1929.

Explanation:

The market crash of 1987 was not only larger in total volume, but also was much larger in percentage than the market crash of 1929. On October 19, 1987, the Dow Jones lost more than 22.6% of its value, but the consequences were not nearly as bad as what happened after the market collapsed in 1929.

The problem with the crash of 1929, was that it involved several aspects of the economy and wasn't a single day event. The economy back in the 1920s was like a balloon being filled with water, but it didn't burst at once, it started to leak. As the balloon leaked, the whole economic system started to collapse mainly because the balloon wasn't filled with water, but rather it was filled with speculation and when investors realized that all their money was built over sand castles, they started to panic. And as the days went by and no solution was apparent, panic grew and it spread to all the economy.

It is sometimes really hard to position ourselves very many years ago when the rules and laws regarding economic activities were different, since we tend to believe that things have always been like they are now. But back then, things were much different and the rules regarding the economy were basically non-existent, so a lot of manipulation and corrupt practices existed.