economy devastated

Re: economy devastated



1. There was a major economic depression which began in 1929, so income levels, at least in western countries (eg USA, Europe etc) fell for most people.

Demand was affected because people have less money to spend, even on food. Many people went hungry during the depression.




2. Region A was severely affected because less of its crops were bought by other countries, and it was (I presume) unable to grow less of these crops, which would have increased the price of the crops that WERE being sold.


Because farmers' income was reduced, and because, I assume, most of region A's income came from selling crops, this had an effect on Region A's entire economy.

eg because farmers cannot afford to buy from shops, shops fail.....because the shops are not buying goods for their shops, the people producing THOSE goods end up unemployed...and so on.

thanks for the quick response.

i still don't understand a point.

see, region A 's crop's demand is still in the international market as the para says "Interestingly , demand in .....slightly affected"

this ensures that international market wants crop from Region A ...is not it ?

why then region A wont be able to supply the crop ?

It WILL be able to supply the crop.......it just won't be able to SELL enough of the crop to keep its economy healthy.

It sounds as though the economy was quite fragile, since it took only a small drop in demand to cause major problems....quite common, I believe, in tropical regions.

Hm, analogy time...

Say the temperate region was growing and exporting wheat. Depression hits, and suddenly the wheat market is 5% smaller. Wheat farmers can plant some of their fields with crops other than wheat, sell those crops, and still supply the level of wheat that the foreign market demands.

Say the tropical region is growing bananas. Unlike a wheat field, you can't just grow something else that year; the banana trees are there year after year. World banana demand goes down by 5%, but the banana supply stays the same. Suddenly 5% of the banana farmers can't sell their crop! Nobody wants to be one of those 5%, so they lower prices to ensure that their bananas are the ones that sell. The market price of bananas falls, and it wasn't all that high in the first place, so now even the farmers who CAN sell their bananas aren't making enough to keep up with their expenses.

Were the bananas right next door to the consumers of the bananas, then the falling price would stimulate banana consumption; but they're in another country, and a significant part of the cost of bananas is getting the bananas there, so there's not a big increase in demand to match the drop in the crop price. So you suddenly have a lot of banana farmers who're all broke, can't pay their loans, losing their plantations, can't feed their kids... bad stuff.

If somebody slips on a banana skin what does that have to do with the rest of us. They should have saved up in the good times instead of expecting them to go on forever.