June 2015 2-03: Explain why there was a steep rise in unemployment in the USA in the years 1930 to 1932. [12 marks]

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June 2015 2-03: Explain why there was a steep rise in unemployment in the USA in the years 1930 to 1932. [12 marks]

Causes

  • caused a financial and banking crisis in the USA that led to the contraction of business and the laying off of workers
  • there was a slump in world trade so that US exports collapsed
  • the financial crash exacerbated the serious crisis in agriculture and loss of jobs for farm workers.
  • the policies at the Hoover Administration were deflationary, at least at first.  This is why unemployment worsened after 1930
  • other countries followed deflationary policies.  This hit US exports.

Effects

Overall summary

The focus of this question is on the reasons why the USA was hit by mass unemployment in 1930–1932. In 1929, 3% were unemployed; this doubled to 8% in 1930 and continued to rise in 1931 before peaking at 24% in 1932. Answers at the higher levels will not merely provide a list of appropriate reasons but will offer links, differentiation of prioritisation – for example showing awareness of the delayed impact of the 1929 stock market collapse.  The ‘steep rise’ was cumulative, not sudden, and superior answers will explain this.

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