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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When banks have too much money and not enough customers
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Banks ran out of money because too many people withdrew it at one time
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Banks were forced to close due to the Stock Market Crash of 1929
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Overproduction of the dollar bill led to inflation and loss of jobs at banks
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Detailed explanation-1: -A bank failure is the closing of an insolvent bank by a federal or state regulator. The comptroller of the currency has the power to close national banks; banking commissioners in the respective states close state-chartered banks. Banks close when they are unable to meet their obligations to depositors and others.
Detailed explanation-2: -A bank run occurs when large groups of depositors withdraw their money from banks simultaneously based on fears that the institution will become insolvent. With more people withdrawing money, banks will use up their cash reserves and ultimately end up defaulting.
Detailed explanation-3: -Deposit insurance If a bank collapses, the FDIC allows a bank with high capital reserves to acquire the vulnerable bank, together with its customers. The customers can then access their deposits in the new bank. In the worst cases, the FDIC may auction the collapsed bank’s assets to pay back depositors.
Detailed explanation-4: -Banks can fail for a variety of reasons including undercapitalization, liquidity, safety and soundness, and fraud.