Lesson 30: Whatdunnit? The Great Depression Mystery

The students read a brief passage posing the basic question about the Great Depression: Why did it happen? A brief simulation activity shows how unemployment in one part of the economy can lead to unemployment in other parts of the economy. With the aid of a visual, the teacher compares the simulation to the business cycle. The teacher then uses another visual to introduce the role of bank failures in intensifying the depression, and the students fill out a worksheet that helps them understand how the decisions of foreign and domestic banks, the Federal Reserve System and individual depositors brought about the collapse of the American banking system in 1933.


Business cycle, Demand, Federal Reserve System, Income, Money, Multiplier
National Content Standards in Economics:
  • Standard #18: Economic Fluctuations
  • Standard #20: Fiscal and Monetary Policy