What Caused the Recovery from the Great Depression?

How did the economy recover from the Great Depression? In this video, expert David Wheelock of the St. Louis Fed describes the role rapid money supply growth and the New Deal played in the economic recovery from the Great Depression. “So, what caused the recovery? It's when the price level started to recover. From deflation, we turned the corner and prices started rising. When prices came up, the real interest rate went down, making it cheaper for firms to invest in plant and equipment, putting people back to work ... and you get increased spending in the economy.”

David Wheelock discusses the Great Depression as part of an economic education workshop at the St. Louis Fed. This is Part 8 of that presentation. Recorded July 11, 2013.

Tools for Teaching about the Great Depression

Discover Great Depression activities and lesson plans.

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