MANAGERIAL ECONOMICS PAPER

Managerial Economics Paper

Managerial Economics Paper

Managerial Economics: Developing Practical Tools and Concepts

The purpose of this paper will to reflect on experiences and knowledge gained in the module of Managerial Economics. The study of Managerial Economics helps develop practical tools and concepts for individuals and businesses. It exceptionally combines the discipline to other managerial

Economic Crashes and Booms in the 20th Century

The history in the 20th century was overwhelmingly economic. The advances of technology, productivity, and organizations along with the material wealth of human mankind expanded beyond all previous imagining

Although the economic forces were still developing; the early 20th century was still very incompetant. Little was known or learned about how to manage a market

Kenneth Galbraith's analytical text entitled "1929: The Great Crash," effectively demonstrates the validity of his thesis that a frightening prelude to the stock market crash of many years ago was ignorance complimented by complete societal unexpectedness.

With impeccable consistency, the author asserts that the summer just before October 1929's economically devastating crash was one marked by both a superficial affluency and an unwarranted optimism.

Great Depression

Agriculture, the construction industry, and manufacturing were particularly hard hit. Prices paid to farmers fell by half, dropping the ratio of the prices they received to the prices they paid by more than a third. Industrial production fell by 45% (with output of durable goods, such as automobiles, falling 70-80%), and new housing starts dropped 82%. Gross investment plummeted by more than 80%, meaning that the capital stock actually shrank because depreciation outstripped new investment, although personal consumption fell much less rapidly, only 18%.

Although almost everyone suffered, the economic pain was not shared evenly; investors saw the value of the Dow Jones Industrial Average fall over 80%, and soup lines swelled with unemployed workers, but deflation-adjusted hourly earnings of those with jobs were virtually unchanged. All in all, the Depression hit harder in the United States than anywhere else. From 1929 to 1932, total industrial production fell by 11% in Britain, 23% in Italy, 26% in France, 32% in Canada, 41% in Germany, and 45% in the United States.

Contemporaries lacked good explanations of the causes of the Great Depression, which often led them to adopt policies that only worsened the situation. However, economic historians have done much to cast light on the matter. The general consensus is that policy mistakes and a malfunctioning international financial system converted an ordinary business downturn into the Great Depression. As Peter Temin and Barry Eichengreen put it, “central bankers continued to kick the world economy while it was down until it lost consciousness.”

Traditional explanations of the Depression begin with the spectacular stock market crash of October 1929. The crash wiped out significant gains in asset prices and drove overleveraged investors into debt. It seems to have signaled a shift from optimism to pessimism in the economy, but most modern explanations see it as a secondary cause of the Depression. Another factor that may have played an important role in reducing aggregate demand is the dissipation of a home construction ...