Economic Impacts of the Great Depression

What was a significant economic condition in the United States leading up to the Great Depression?

• The economy was experiencing a period of stable growth and low debt.

• Many people were buying consumer goods using credit and installment plans that were not sustainable.

• The agricultural sector was thriving due to increased demand and high prices.

• Government spending on infrastructure projects was at an all-time high.

What was a key characteristic of the American banking system that made it vulnerable to widespread failures during the Great Depression?

• Most banks were large, national institutions that were too big to fail.

• Banks were heavily regulated by the government, limiting their ability to adapt.

• The majority of banks were small, independent institutions that lacked sufficient reserves to handle large withdrawals.

• Banks were primarily focused on international investments rather than domestic lending.

What economic phenomenon occurred when the credit system froze during the Great Depression, causing businesses to cut costs and lay off workers?

• Inflation

• Deflation

• Hyperinflation

• Stagflation

How did the United States' decision to raise tariffs, such as the Hawley-Smoot Tariff, impact the global economy during the Great Depression?

• It significantly boosted American exports and created many new jobs.

• It encouraged other countries to lower their tariffs, increasing world trade.

• It led to other countries raising their own tariffs, causing a decrease in global trade.

• It had no significant effect on international trade or the global economy.

What financial system did central bankers in Europe and America refuse to abandon, which limited governments' ability to stimulate their economies during the Great Depression?

• The silver standard

• The gold standard

• The bimetallic standard

• The fiat currency system

What was a direct consequence of the United States not abandoning the gold standard after Great Britain did in 1931?

• World financial markets became more stable.

• The US dollar significantly increased in value.

• World financial markets froze up even further.

• The US was able to export more goods.

How many American banks had failed by the end of 1931, contributing to the worsening economic crisis?

• Approximately 500 banks

• Around 1,000 banks

• Over 2,200 banks

• Fewer than 100 banks

Which of the following was an action taken by President Hoover to address the economic crisis during his presidency?

• He significantly cut federal spending on public works projects.

• He encouraged private businesses to lower wage rates.

• He secured congressional approval for new public works projects.

• He nationalized all major industries.