Causes of the Great Depression

Multiple Choice

Which of the following best describes the business cycle as it relates to the 1920s economy?

• Economies always grow without downturns.

• The 1920s peak was based on strong fundamentals.

• Economies fluctuate, and the 1920s peak lacked strong fundamentals, making a downturn inevitable.

• Wealth was evenly distributed among all Americans.

Multiple Choice

Which of the following was a major economic weakness beneath the surface of the 1920s prosperity?

• Farmers faced rising prices and increased demand

• Factories underproduced goods

• Wages kept pace with productivity

• Factories overproduced and wages lagged behind productivity

Fill in the Blank

Bank failures during the Great Depression were largely caused by people losing jobs and being unable to repay their ___.

Multiple Choice

How did the Hawley-Smoot Tariff contribute to the deepening of the Great Depression?

• It encouraged more exports from the U.S.

• It caused other countries to retaliate with their own tariffs, reducing global trade.

• It lowered taxes on imported goods.

• It increased government spending.

Multiple Choice

Which of the following best explains why the stock market crash of 1929 led to widespread economic hardship?

• People lost confidence in banks and withdrew their savings, causing bank failures.

• Stock prices quickly recovered, so there was little long-term impact.

• The government immediately intervened to stabilize the economy.

• Most Americans did not own stocks, so they were unaffected.

Multiple Choice

Which of the following actions would most likely help prevent another economic crisis like the Great Depression, based on what you have learned?

• Raising tariffs to protect domestic industries

• Allowing banks to take bigger risks with savings

• Increasing government spending to create jobs

• Reducing international trade