Judging from the events of the late 1920s and early 1930s how important do you think public confidence is to the health of the economy?

Answer 1

Very important, because if consumers don't feel as if the banks and lending institutions and their jobs aren't safe, they will save all their money for a rainy day instead of throwing it back into the economy by spending.

When it comes to those big ticket purchases like business opportunities and expansions, shares, and property acquisitions, consumers will be reluctant to make any big decisions if a. the banks are not fiscally stable b. the stock marketis volatile and c. the property values are fluctuating.

If the government does not inject confidence into the public after a big event, there will be a flow on effect, whereby consumers panic and the worst case scenario becomes reality.

The impact of the media and consumer confidence was probably not fully realised back in the 1920's -1930's depression, as the effects were unprecedented. in the current economic climate we are fully aware of the importance of remaining positive, however the information age means that news travels so fast that the government has less control over broadcast media, and panic can settle in very quickly.

Answer 2

The 1920's was a rebound from WWI with many hopes for the future. People were making more money than they were before and had confidence that the good times would continue. They spent money and that helped grow the economy.

The 1930's showed people once again that the economy is not controlled by their government and their govenment, particularly in Western Canada, were very slow to offer real assistance. As a result they lost confidence and stopped spending money, actual most had little money and many many Canadians had no money at all. Starvation, a spector from the past, became a very real threat for some and they had to flee to find food. No confidence in the economy meant little economic activity.