THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They did not impact the economy because people still had credit cards.
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They caused the economy to become more stable because money began circulating.
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They negatively impacted the economy because many people lost everything that they had-including their life savings.
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Bank Failures did not exist.
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Detailed explanation-1: -When investment slows down, economic growth slows as a consequence and customer demand is low as items become difficult to afford. As more people become unemployed, consumer demand drops even further. Lowering demand leads to industries requiring fewer investments to fuel the production of their goods and services.
Detailed explanation-2: -Banks also play a central role in the transmission of monetary policy, one of the government’s most important tools for achieving economic growth without inflation. The central bank controls the money supply at the national level, while banks facilitate the flow of money in the markets within which they operate.
Detailed explanation-3: -What was the most damaging effect of bank failures? People who worked in banks lost their jobs.
Detailed explanation-4: -That is the monetary explanation for the Great Depression. Bank failures, bank runs caused a contraction of the money supply, causes a decline in spending, investing, and GDP.