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Monetary Economics — Economics STD 12 — Question

Tamilnadu BoardEnglish MediumSTD 12EconomicsMonetary Economics3 Marks
Question
Explain the Trade cycle Depression?
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Answer

Depression:
  1. During depression the level of economic activity becomes extremely low.
  2. Firms incur losses and closure of business becomes a common feature and the ultimate result is unemployment.
  3. Interest prices, profits and wages are low.
  4. The agricultural class and wage earners would be worst hit.
  5. Banking institutions will be reluctant to advance loans to businessmen.
  6. Depression is the worst phase of the business cycle.
  7. Extreme point of depression is called as “trough”, because it is a deep point in business cycle.
  8. Any person fell down in deeps could not come out from that without other’s help.
  9. Similarly, an economy fell down in trough could not come out from this without external help.
  10. Keynes advocated that autonomous investment of the government alone can help the economy to come out from the depression.

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