Final answer:
France's economic crisis in 1789 was due to massive debt from military expenditures and luxurious royal spending, an outdated tax system favoring the aristocracy, poor harvests causing food shortages, and pronounced wealth inequality, all of which led to widespread unrest and the start of the French Revolution.
Step-by-step explanation:
France faced a severe economic crisis in 1789 due to a combination of factors. The government was dealing with massive debt, partially as a result of support given to the American colonies during their fight for independence, and significant expenditures by King Louis XVI, including the opulent spending on the Palace of Versailles. Additionally, there were structural problems within the French economy, such as an antiquated system of feudal dues and rights that placed a heavy burden on peasants while the nobility enjoyed exemptions from taxation.
Moreover, the crisis was exacerbated by a series of poor harvests that led to food shortages and higher prices, increasing the discontent among the lower classes. The frustration of the common people was further fuelled by a stark wealth inequality, which was symbolized by the luxurious lifestyle of the aristocracy contrasted with the poverty of the lower classes, including the sans-culottes. The culmination of these factors led to widespread unrest and ultimately sparked the French Revolution.
The financial inadequacy of the Crown to manage the nation’s economy, including its failure to reform the tax system and alleviate the suffering caused by famine and price increases, made it necessary for King Louis XVI to call the Estates-General. The meeting was intended to address the fiscal dilemma but instead paved the way for revolutionary change as it highlighted the deep-seated issues within the social and political fabric of France.