eco

Definition: Classical economics refers to the economic theories and principles that dominated economic thought from the late 18th century until the 19th century, primarily associated with the works of Adam Smith and others.
Characteristics:
- Focus on capitalistic economy.
- Market is the primary driving force of economic activity.

Market Dynamics: In classical economics, the market is responsible for setting prices of products.
Price Determination:
- Price is influenced by the intersection of demand and supply.
- Equilibrium: The state where demand equals supply.
- Visual aid: This can be represented on a graph where the x-axis represents quantity and the y-axis represents price; the intersection point indicates the market price.

Described as harsh and competitive:
- Not considerate of vulnerable populations (e.g., the elderly, sick, and unemployed).
- Individuals are generally responsible for their own welfare.
- Historical Context: The U.S. functioned under a capitalistic society from 1776 until the mid-1930s.

Overview: A period in the 1920s marked by economic prosperity and cultural dynamism.
Cultural Events: Reference to the lively social scene, including cancan girls and nightlife.

Catastrophic event beginning in 1929, specifically noted on October 29, 1929, termed Black Tuesday.
Stock Market Crash:
- Investors woke up to see their shares worthless, creating a panic with mass economic effects.
Bank Failures:
- Description of banks collapsing, leading to a loss of access to individual savings.
- Explanation of how banks utilize deposits for loans rather than keeping all funds on hand, thus making them vulnerable.

Economic Struggle: Farmers lost their lands due to failure to repay mortgages to banks.
- Consequence: Resulting food shortages during the Great Depression.
Soup Kitchens: Emergence of places for the needy to receive basic necessities like soup.

Definition: A severe drought during the 1930s that exacerbated the agricultural crisis, particularly in the American Midwest.
Cultural Reference: Mention of Of Mice and Men by John Steinbeck, illustrating the plight of itinerant workers during this period.
Economic Effects: The inability to grow crops due to drought, contributing to food scarcity.

Historical Unemployment: Noted as reaching 25% during the Great Depression.
- Realistic unemployment estimates could be higher (up to 50%).
Comparison of modern unemployment metrics, citing the concern if rates rise above 8%.

Herbert Hoover (Republican President): Did not implement effective measures during the Great Depression.
- Prior significant project: Hoover Dam, conceived prior to the economic crisis.

Description and function:
- Located in Arizona, the dam regulates the Colorado River and generates electricity for several states (Nevada, California, Arizona).
- The dam was a monumental project that created numerous jobs.
- Mention of the construction of nearby communities, referred to as Hoovervilles, which housed workers with basic shotgun-style homes.
Significance: Highlighted as an engineering marvel and important historical site.

Election Context: Roosevelt was elected in 1932 in response to the Great Depression.
New Deal Policies:
- Roosevelt introduced a wide array of government programs designed to aid recovery from the economic downturn.
- Emphasis on concepts of government intervention in the economy.

Introduction of government regulation in economic activities emerged from Roosevelt's policies.
Named after John Maynard Keynes, a pivotal figure in modern economic thought.
Contrast with classical economics, advocating for greater government involvement to stabilize the economy and prevent future depressions.
Law of Invisible Hand: Described by Adam Smith:
- This principle suggests that individuals pursuing their self-interest inadvertently contribute to the overall economy and public good.
- People enter fields not for altruism but to satisfy their individual desires, and in doing so, provide essential services and products to society.

The major causes of the Great Depression included destructive economic practices, drought conditions, and high unemployment, compounded by inadequate governmental response during the initial stages.