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18.1 Lesson

Essential Questions

1. What is the Great Depression? 

2. What is inflation and deflation?

3. What were the results of the Great Depression?

 

Business School Lessons Links to an external site.

 

Bellringer #33

Read the different scenarios below and decide whether the scenario is explaining “deflation” or “inflation”.

 

Deflation is a general downward movement of prices for goods and services in an economy.

Inflation is a general upward movement of prices for goods and services in an economy.

 

Scenario 1: Prices drop as the markets and businesses start to lose consumers and money because of the COVID-19 pandemic. (Deflation or Inflation?)

 

Scenario 2: Gas prices have increased from 90 cents a gallon in 1988 to around $2.5 a gallon today. (Deflation or Inflation?)

 

Scenario 3: Housing prices fall, land prices fall, company share prices fall and currency collapses during an economic crisis within the United States. (Deflation or Inflation?)

 

Scenario 4: After losing WWI Germany was forced to pay huge war debts to the victors of the war. Germany had to pay reparations through their fixed currency (the ‘Papiermark’) causing Germany to sell huge amounts of their ‘Papiermark’ for others foreign currencies. By doing this so much, the cost of a loaf of Bread in Berlin in 1922 cost around 200,000,000,000 ‘Papiermarks’!  (Deflation of Inflation?)

 

Lesson Instructions

Step 1:  Read the first few paragraphs of the following document and list three reasons "Why we study the Great Depression?"  Also, list the causes of the Great Depression.

Download An Overview of the Great Depression.docx

 

Step 2:  Complete Section 1 of the Download CH18 Reading Guide.docx

    Book link: Download Chapter 18 - The Great Depression Begins.pdf

 

5 Causes of the Great Depression Links to an external site.

 

Step 4- Activity:  With a partner, based on our discussion/notes, why was this depression "Great"?  Use statistics and vocabulary to support your claim.

 

My argument for why the Great Depression was "Great":

  • Real GDP fell 29% from 1929 to 1933.  Why?
  • Unemployment Rate rose to 25% in 1933.  Why?
  • Deflation causes households/firms to postpone spending.  Why?
  • People were afraid to spend; uncertain future; lost jobs; lower wages. 
  • Inflation decreases purchasing power of the dollar.  Why? 
  • Before the Great Depression, Herbert Hoover declares, "We are nearer to the final triumph over poverty than ever before in history of any land!"  
    • Why did he think this way?