USA HISTORY

Detailed explanation-1: -E. forgave the debts owed by former allies during the War, and reduced the debts of other nations. In 1931, the severity of the depression increased when the Federal Reserve Board A. closed all financially-ailing banks.

Detailed explanation-2: -So in 1931, as the gold flowed out the system, to Europe and other countries, there was a loss in reserves and the central bank, the Fed, had to step in to make it up. The Feds raised its discount rates in order to force banks to push up the rate of interest paid to their depositors.

Detailed explanation-3: -The Great Depression was the worst economic downturn in the history of the industrialized world, lasting from 1929 to 1939. It began after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors.

Detailed explanation-4: -On several occasions, the Federal Reserve did implement policies that modern monetary scholars believe could have stemmed the contraction. In the spring of 1931, the Federal Reserve began to expand the monetary base, but the expansion was insufficient to offset the deflationary effects of the banking crises.

Detailed explanation-5: -In the ‘30s, the Fed more or less let the banking system collapse, allowed the money supply to collapse and allowed the price level to fall. You had tremendous deflation, and that contributed to the contraction of the whole economy.