History The Great Depression Questions
The causes of the decline in business investment during the Great Depression were primarily due to the stock market crash of 1929, which led to a loss of confidence in the economy. This resulted in a decrease in consumer spending, leading businesses to reduce production and cut back on investments. Additionally, high levels of debt and overproduction in industries such as agriculture and manufacturing contributed to the decline in business investment.
The effects of the decline in business investment were widespread and severe. It led to a decrease in employment opportunities as businesses laid off workers and reduced their workforce. This, in turn, resulted in a decrease in consumer purchasing power, exacerbating the economic downturn. The decline in business investment also led to a decrease in industrial production, causing a ripple effect throughout the economy. Many businesses were forced to close down, leading to a rise in bankruptcies and a collapse of the banking system. Overall, the decline in business investment deepened the economic crisis and prolonged the duration of the Great Depression.