The Great Depression started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929, (known as Black Tuesday). Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession.
The Federal Reserve is the Central Bank of the US and responsible for the country's monetary policy. The videos below provide a brief explanation of what the Fed is and does. They are provided as a supplement to our studies in Macro Economics but are not a substitute for the readings.
Economics is a behavioural science that seeks to understand human behaviour in an exchange or market environment. In our case, we are interested in how people behave in what is known as a competitive market economy. A competitive market economy is based on four underlying assumptions, as follows:
In all markets, lots of buyers and sellers, buying and selling a homogeneous product or service, none of them price makers.
Perfect information among consumers and producers (including investors).
Perfect mobility of resources.
Clearly defined property rights.
If one or more of these rules fails to apply to a market or economy, we have a market failure. The question is what to do when market failures arise. Since the real world doesn't function according to theory, most markets are rife with market failures. In the course below, we will study the above assumptions and the consequences when market failures arise.