Chapter 3

NCERT
Class 10
History
Solutions
3. Explain the causes of the Great Depression.

Question:

Discuss

Explain the causes of the Great Depression.

Answer:

  • Agriculture overproduction was one of the major causes of the Great Depression which led to fall in prices. With the fall in prices and decline in agricultural income, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income. This worsened the glut in the market, pushing down prices even further. Farm produce rotted for a lack of buyers.
  • Another cause of the Depression was shortage of loans. In the mid 1920s, the US gave loans to many countries so that they could finance their investments. But the US withdrew giving loans if there was any kind of trouble. So countries depending crucially on US loans faced an acute crisis disturbing world trade.
  • Conditions created by the War were also responsible for the Great Depression, during expansion to fulfill the increasing demand for war-related goods. But after the war, the sharp decrease in demands for military and war products gave birth to economic depression.

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