The text authors assert that “the real problem [during the Great Depre

The text authors assert that “the real problem [during the Great Depression] was not tight credit, but the soft demand for goods.” Explain how a low level of consumer demand produced a deepening and widening economic depression in America.

What will be an ideal response?

ANSWER
Chronic low wages and layoffs produced low consumer demand. In response, producers cut back production (instead of lowering prices), and laid off more workers. Businesses did not borrow money (not intending to expand production), banks went broke, people lost their savings, and demand dropped even further.