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28 December, 21:52

How did underconsumption contribute to the depression?

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  1. 28 December, 22:07
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    The great depression was a kind of vicious cycle that repeated itself to create an economic disaster. A reactant in this formula was under consumption.

    The great depression first emerged as a result of under-consumption for farmers as they were unable to invest in banking. Something that led to nearly 9,000 banks crashing, but its impact lingered many years after the initial crash as well.

    Since many companies went bankrupt, people became unemployed and when people became unemployed they spend less money. This chain comes to revolve around the lack of demand for a surplus of goods, which in result cause more unemployment and less consumers.
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