Hoover failed to solver the crisis in America and therefore was replaced by Roosevelt in 1932. Roosevelt pledged for “A New Deal for the American people”. This “New Deal” was basically a compilation of programs and policies aiming to uplift various areas of the US economy. For example there was the Agricultural Adjustment Act and the National Industrial Recovery Act.
The New Deal wasn’t particularly successful economically but it was most certainly a political success.

The “Keynesian Theory” appeared to solve America’s economic problems. In 1938 President Roosevelt gave in to his close advisors that were confident that the idea would be successful. The theory is that in order to recover, America needed to expand economically. To achieve this, the government ran up a large budget deficit and used to additional money to fuel to economy. By funding large government projects such as major public works, Roosevelt was able to provide people with income and could stimulate demand and get business going again.

However some people criticized the theory. The Keynesian Theory is only effective in the short term and some argue that if it had not of been for WW2, the USA would have gone back into the great depression. Keynes was not concerned about the long-term effects of his ideas though. He said, “long term we are all dead”. Some say that while his ideas were good ion the short term, the long-term effects would have been negative, and the next generation could have suffered.