Explanation:

First World War (FWW) led to mass production in the US and lowered goods prices. With rising wages in US, consumption rocketed as people could afford more goods. Demand for consumer goods was fuelled by a boom in housing construction and real estate business. This created the base for prosperity in the US leading to greater investments and incomes.US started exporting capital to the World and became the largest overseas lender. But since 1929 the world along with US economy slumped into a deep recession.

Implications for Colonial India

India was connected to global economy by way of imports and exports. Both halved between 1928 and 1934.

Negatives

Rural economy suffered more than urban economy. As international food grain prices collapsed, they declined in India too. For e.g. wheat prices declined by 50% in the same period. Peasants who had borrowed in hope of good prices in future, suffered from indebtedness because of falling demand and lower prices. Even as farm incomes lowered, the British government refused to reduce revenue demand. Peasant indebtedness spiked.

Positives

India became a net exporter of previous metals like gold. Keynes thought that India's gold export will help global economic recovery. Since urban incomes (salaries) were fixed, they were better off as prices had plunged. Effective demand for goods increased. Industrial investment also grew as the government extended tariff protection to industries, under the pressure of nationalist opinion.