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oyed in the context of modern economy. The Great Depression is the inventible result of blindly hanging on to the theory of classic economics which adheres to economic liberalism for a long time. However, the Great Depression mercilessly tears the veil of classic economics away, showing the world defects and limitation of classic economics. On the assumption of market economy filled with free competition, economic liberalism sticks fast to the economic policies of freedom and no interference by the government and its central idea is that capitalist economy is able to offer job to every citizen by means of self-regulating, which has been put in an awkward situation by severe economic crisis and huge unemployment and prompts economists to make analysis of the causes for depression.( Wallis, Hohn Joseph ,1999), Combining the market situation at that time and the economic policies pursued by the policymakers together, we are able to find out that the free economic policy is not suitable for the market of the day. Before the outbreak of economic crisis, the American government held fast to the mainstream opinion of market self-regulating and then according to which, carried out a series of economic policies, such as strictly controlling the issuance of bank notes, abiding by the principle of financial and fiscal balance, and acting the role of bystanders doing noting when were confronted with serious market situation of massive bankruptcy among banks and enterprises of different sizes. Then the stock market crashed. (Beaudreau, Bernard C. 1996), President Herbert Hoover is a policymaker of that kind, sticking to traditional economic liberalism, objecting to government interference, the very kind of such unsuitable macroeconomic policies fueling the expansion of economic crisis. (Andrew Atkeson and Patrick J. Kehoe , 2001),Keynes points out that American economic bloom of that day was the product of several factors. On the basis of massive advancement of automobile and electronic appliance industries, American economy was deeply affected by the aberrations of demand and supply meanwhile under the push of real estate fever. In 1929, decreasing investment took place throughout the year. From 1929 to 1932, the total amount of private investment plunged from 15.8 billion to 0.9 billion all the way. With regard to the tough situation of imbalance between personal consume and investment in production. It was high time that government interfered in the economic development, employing the fiscal policy and bearing the responsibility of stabilizing economy and increasing effective demand.
When slopping economy gave a hint that it was bound to be aggravated into the Great Depression, for the government’s part, it should have adopted expansionary fiscal policies, reducing income tax and increasing government expenditure to stimulate demand for investment. However, all the facts proved that the fiscal policies put forward by US federal government were not able to change the tough situation, only leading to deflation. In December, 1930, Hoover came up with a public project program with investment of 116million. ( John Steele Gordon ,2007).This amount of investment compared to the decrease in the private investment was far enough. To solve this problem, tax had been increased to meet the expenditure of government for the purpose of pursuing fiscal balance. This negative, constrictive fiscal policy did not ease the crisis, but to make the current eco本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。