Question

How could the existence of an unemployment insurance system or other transfer programs have reduced the severity of the Great Depression? Reflect on whether they are working currently. What adjustments do you recommend? (Support your answers with academic journal articles.)

Answer 1

During the Great Depression of 1930, make it clear that classical ideas of full employment and automatic functioning of the economy were wrong. In 1929 unemployment level in US was 3 % and in 1933 it reached nearly 25% the US economy contacted by 33% during this period. More than One by fourth of US population become unemployed so they don't have any purchasing power. That's why the Keynesian expansionary policy is important. Through unemployed Insurance Scheme and transfer payments government can able to deliver money in to the hands of general public. So to Dekhen able to demand goods and services which leads to more production and employment opportunities in the economy and the economy kickback to progress from the recession phase. If there is depression in the economy it is always better to use expansionary fiscal and monetary policy but in the case of stagflation these policies didn't work.

For more data refer https://academic.oup.com/oxrep/article/26/3/285/374047