Question

How did the shrinking economy lead to increased layoffs of workers in The Great Depression?

Answer 1

The shrinking of the economy lowered the profit after selling goods and it wouldn't make sense not to lay off workers

Answer 2

Since the economy shrunk, business owners didn't have enough money to pay their workers, and since they didn't sell much, they didn't need workers. Since many people didn't have a job because of the layoffs, they didn't have money to go buy things. It became a cycle.