American Economics Essay Example | Topics and Well Written Essays - 500 words

American Economics - Essay Example It was easily understandable that the situation had worsened far beyond immediate recovery. During this time, the concept of 'free market' prevailed. This idea suggested that the market would effectively balance itself the business could run smoothly without any government intervention. With this belief the government of President Hoover did not take any action believing the market would attain balance soon by itself and prosperity would return. It was assumed that once public regained confidence, business would begin and economy restored; but the business would not resume as there was surplus in the market that was unsold. Later, the government attempted to minimize state spending and increase taxes which in turn reduced the liquid money from market and worsened the situation. Attempts were made later to make this loss good by providing loans to banks in order to pump in money in market by offering relief work, providing loans to industries and expanding public works. No assistance in terms federal help was not provided and the government promoted 'self help' groups to promote self reliance. Decline in world trade and imports reduced because of an increase in import tariff. As an effect, exports also reduced considerably further weakening the state economy. With the onset of President Franklin Roosevelt's government, the