FIGURE 8 AGGREGATE DEMAND, SHORT-RUN AGGREGATE SUPPLY, AND THE DECLINE IN INVESTMENT DURING THE DEPRESSION

Aggregate demand and short-run aggregate supply are superimposed on the real GDP and price level data for the Great Depression. Investment dropped nearly 80% and consumption declined nearly 20%. Together, these reductions in spending created a depression that was so deep that it took the massive spending for World War II to bring the economy back to full employment.