What+is+a+Depression?

Life in a Time of Depression media type="file" key="What is a Depression_.mp3" width="240" height="20" 

 Have you noticed a lot of Help Wanted signs in stores lately? Are new businesses opening up in your area? Are existing ones expanding? These may be signs that the economy is in a boom period. Previously, you read about a decade-long boom that occurred in the 1920s.

 Perhaps, though, the news headlines talk of rising unemployment, and businesses are closing rather than expanding. If so, you may be in a recession. This rising and falling pattern in the economy is known as the business cycle.

 If the cycle continues to fall, and lay-offs and production cuts become severe, the economy enters a depression. The depression of the 1930s was so severe it has become known as the Great Depression.

Causes of The Great Depression In Canada

Much of what led to the Great Depression of the 1930's was a result of the prosperity of the 1920's. Through industrialization the economy had changed in so many ways that people did not know what the future held. This uncertainty and optimism led to these underlying causes of the Great Depression:

1. Canada’s economy relied heavily on exports to other countries

2. European economies were still weakened by the effects of WWI

3. Over-dependence on the United States as a market and a source of investment funds

4. Overproduction of goods- from wheat to manufactured products

5. On-margin stock purchasing (borrowing money to buy shares)

6. Crash of the New York Stock Market, October 29, 1929

Take note of these causes!!