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MAINS 2013
GS1
10 marks

What policy instruments were deployed to contain the great economic depression?

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7 min
200 words
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What the examiner wants

Explain the fiscal, monetary, trade and welfare tools used by states to fight the Great Depression.

WhatAnswer exactly what the question asks.

Demand-wise check

  1. 1Monetary: leaving the gold standard (Britain 1931, US 1933), cheaper money≈35 words
  2. 2Fiscal and public works: New Deal (TVA, WPA, CCC); German public works; Swedish counter-cyclical spending≈35 words
  3. 3Banking and welfare: Emergency Banking Act, Glass-Steagall (deposit insurance), Social Security Act 1935≈35 words
  4. 4Trade: protectionism (Smoot-Hawley 1930, Imperial Preference 1932) which deepened the slump≈35 words

Open in about 30 words and close in about 30.

Answer plan

Nature of crisisMonetaryFiscalBanking/welfareTradeLessons (Keynes, Bretton Woods)

Where marks usually go

  • Describing causes of Depression instead of instruments
  • Covering only the US New Deal

Draw this

  • Table: instrument, country, example, outcome

Value addition

  • ThinkerKeynes's General Theory (1936) gave the theory for deficit spending to restore demand.J.M. Keynes, 1936
  • LawGlass-Steagall Act (1933) separated commercial and investment banking and created the FDIC.US Banking Act, 1933

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