The Great Depression was one of the most severe economic situations the world had ever seen. It all started at the end of 1929 and lasted until 1939. Although the origin of the depression was the United States, but the US economy being highly correlated with the global economy, the negative effects were seen all over the world with high unemployment, low production and deflation. Overall it was the most severe depression ever faced by the Western industrialized world. Stock market crashes, bank failures and much more left governments ineffective and this led the global economy to what we now call the “Great Depression”. (Rockoff). As for the cause and what led to the Great Depression, the question is still debated among eminent economists, but the crux provides evidence that the worst depression ever experienced by the global economy resulted from multiple causes which are as follows: Stock Market Crash: Post In the World War I era, among all countries it was only the United States that was in a win-win situation. Both during and after the war, the U.S. economy saw a revenue boom with massive trade between Europe and Germany. As a result, the 1920s turned out to be a prosperous decade for Americans and this led to the emergence of mass investments in stock markets. As income increased after the war, many investors purchased stocks on margin and with the US stock market going up several times from 1921 to 1929, investors earned substantial returns during this period which created a stock market bubble in the United States. However, to stop the rise in stock prices, the Federal Reserve increased the interest rate of loan funds, which depressed interest-sensitive spending in many sectors and as a result there was a record drop in stocks of these companies and eventually the stock bubble burst. finally it exploded. The collapse was so dramatic that stock prices were even lower than the margins that investors had deposited with their brokers. As a result, not only investors but also brokerage firms have become insolvent. In the two days between October 15 and 16, the Dow Jones fell 33%, and the event was called the Great Crash of 1929. Thus, as investors defaulted, a major shock occurred in American aggregate demand. The purchase of durable goods and business investment fell sharply after the stock market crash. As a result, businesses experienced a buildup of inventories, and real production declined rapidly in 1929 and throughout the 1930s in the U.S...