PRACTICE for Great Depression Quiz

Why would buying on margin seem like a good idea during the late 1920s?

• You only had to use a little of your own money to invest in the stock market

• You were guaranteed a massive return on any investment

• An investment would double no matter how well the business itself performed

• Many investors lost money

How would a decrease in the value of stock affect those who bought on margin?

• There would be no impact on those individuals

• They could end up owing money and had no way to pay it back

• They would have a surplus of funds to pay off their debts

• They would be given their money back and be able to pay off their debts

How did workers not being able to afford goods affect factories, farms, and businesses?

• It led to an increase in those areas

• It led to a decrease in demand and caused those areas to fail

• It had no impact on factories or farms, but caused businesses to fail

• It only causes a few businesses to close

All of the following groups contributed to banks failing except

• People who bought on margin

• Farmers who had taken out too many loans

• Depositors who placed their life savings in the banks

• Banks over-lending funds

If a bank failed and people could not get there before it closed what happened to their life savings?

• It was insured by the government so there was no problem

• The bank promised to pay them back

• Their money was gone

• They’d be paid back by those who the bank had loaned their money to

How did businesses try to save themselves when the depression began?

• They continued paying workers the same wages

• They cut workers and decreased wages for those who remained employed

• They took out massive loans from banks

• They merged with one another to lower costs and kept all workers

Why did the stock market begin to fail in 1929?

• Many of the big investors decided to start selling their stocks and others followed

• Fear from the outbreak of war in Europe led to a massive sell off of stocks

• Pres. Hoover announced the government would begin regulating the stock market

• Communists had attempted to bomb the stock market in New York City

How is the value of stock affected if a massive amount of it is dumped on the market at one time?

• It leads to an increase in the value of the stock

• It leads to a massive decrease in the value of the stock

• There usually is a short period where it decreases and then it greatly increases

• There are no changes to the value of the stock

Why did Pres. Hoover respond to the economic depression in the manner he did?

• He believed in rugged individualism and laissez faire economics

• He believed that the government should do everything it can to help everyone

• He believed that the federal government could only help if the people petitioned him directly for assistance

• He believed in the prime the pump theory

President Hoover attempted to solve the problems caused by the depression by taking which action?

• Passing as many laws as possible to help every American

• Loan money to business through the government created Reconstruction Finance Corporation

• Giving bonuses to World War One veterans so they could spend the money

• Creating social security to free up jobs