Supply and Demand of Labor

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Category: Business and Industry

Date Submitted: 09/11/2012 07:34 PM

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The Great Depression is a time period in the United States during the 1930s where the country experienced an economic crisis. The problem “snowballed” out of control after several negative events occurred. The crash of the New York stock market caused U.S. citizens to lose large amounts of money. Demand for goods and services decreased because people had less money to spend. Because of this, the market equilibrium was decreased and there became an excess of goods and services. Usually when there is an excess of goods and services we would see prices drop because of competition, therefore the demand for goods and services would increase. This time however, there was such an increase in goods and services that people started losing their jobs because they were no longer needed to produce goods or provide services. This is not a conventional way of looking at the way the economy operates.

During the depression, people did not have any money to spend because they didn’t have jobs to earn an income. During the worst, or lowest, point of the depression, approximately 25% of all workers were unemployed. Additionally, 3 7% of nonfarm workers did not have jobs. People did not have money to eat; some could no longer afford to keep their property and were forced to move. It was a time of economic hardship and despair for numerous people throughout the entire country.

During the great depression people tried to save money in every way that they possibly could. People were not interested in borrowing money from banks because of the fear they would not be able to pay it back even though banks had lowered their interests rates. The Great Depression affected nearly everyone and practically every aspect of the economy.