Recession
A significant decline in economic activity lasting more than a few months, measured by real GDP and unemployment
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| Term | Definition |
|---|---|
Recession | A significant decline in economic activity lasting more than a few months, measured by real GDP and unemployment |
Depression | A severe recession with no exact scientific definition |
Expansion | The normal state of the economy where real GDP increases and unemployment is low |
Post-WWI economic growth factors | High production levels and no war-related destruction |
Stock Market Crash (1929) | Collapse of stock prices that led to bank failures and economic panic |
Cause of bank runs (1929) | Increased uncertainty about the economy |
Smoot-Hawley Tariffs | Tariffs designed to protect American farmers that led to reduced international trade |
Who supported Smoot-Hawley Tariffs | Farmers |
Effect of Smoot-Hawley Tariffs | Collapse of international trade |
Banking crisis effect | Bank failures led to fewer loans, less spending, and deeper recession |
New Deal | Programs and reforms by FDR to combat the Great Depression |
3 R’s of the New Deal | Relief, Recovery, Reform |
Relief | Immediate help for the poor and unemployed |
Recovery | Efforts to improve the economy |
Reform | Changes to prevent future depressions |
Keynesian Economics | Belief that government should intervene to manage economic cycles |
Neoclassical Economics | Belief that the economy will self-correct without government intervention |
Government spending shift | From state level to federal level |
Securities | Financial assets like stocks and bonds representing ownership or debt |
Securities Act of 1933 | Law increasing transparency and preventing fraud in the stock market |
Glass-Steagall Act | Law separating commercial and investment banking |
FDIC | Government agency that insures bank deposits up to $250,000 |
Purpose of FDIC | Prevent bank runs |
AAA (Agricultural Adjustment Act) | Paid farmers to reduce output to raise prices |
NLRA (National Labor Relations Act) | Strengthened labor unions and worker rights |
Closed shop | Workplace where employees must be union members |
TVA (Tennessee Valley Authority) | Program that expanded electricity access in rural areas |
TVA impact | Increased electricity access from 2% to 90% |
Conversion (WWII) | Shift from peacetime to wartime production |
WWII unemployment rate | Around 1–2% |
WWII GDP growth | About 70% increase in real GDP per capita |
U.S. industrial production in WWII | About 50% of global production |
Rationing | Government control of scarce goods using ration stamps |
Military-industrial complex | Close relationship between government and defense industries |
War financing | Funded through taxation and war bonds |
GI Bill | Provided education and housing benefits to returning veterans |
Great Compression | Period of decreasing inequality and expansion of the middle class |
Marshall Plan | U.S. aid to rebuild Europe and prevent communist expansion |
Bretton Woods System | System tying the U.S. dollar to gold and other currencies to the dollar |
End of Bretton Woods | U.S. left gold standard in the 1970s |
Floating exchange rates | Currency values determined by supply and demand |
Deindustrialization | Shift from manufacturing to service-based economy |
Services | Intangible goods like finance, tech, and education |
Financialization | Shift from producing goods to making money through financial activities |