Causes of the Great Depression

Which of the following is a true statement about Black Tuesday?

• It was the direct cause of the Great Depression.

• It was the result of a steady decline in demand for stocks in the previous 12 months.

• It was a cause of the underlying problems that led to the Great Depression.

• It was caused by the Dust Bowl that wiped out farms in the Midwest.

What caused Herbert Hoover to raise taxes during the Depression?

• He wanted to prolong the recession for political gain

• He thought that collecting taxes would make stocks rise immediately

• He wanted to balance the federal government's budget

• He wanted to re-distribute money from the rich to the poor

Which of the following trends during the 1920s set the stage for the Great Depression?

• Americans building up personal debt

• Banks making lots of very safe loans

• Americans refusing to play the stock market

• A lack of developed farmland in the Midwest and Great Plains

How do the Federal Reserve and the government respond to economic slowdowns today?

• They raise interest rates to encourage saving

• They keep a tight rein on the money supply

• They make money available to individuals and businesses

• They don't do anything; the market corrects itself

What can you infer about the federal government's economic policies during the Roaring Twenties?

• It regulated the stock market tightly

• It encouraged saving

• It encouraged the fair distribution of wealth

• It encouraged spending

Which of the following problems was a key factor that helped lead to both the Great Depression of the 1930s and the economic recession that began in 2008?

• Americans were going to too many jazz concerts.

• Business was booming, and profits were distributed equally among workers and managers.

• The United States was mired in a costly war at both times.

• Americans were spending too much money that they didn't have.

Which of the following is an opinion about credit?

• During the 1920s, people could buy stocks on credit.

• Credit makes it easier for people to buy things they can't afford.

• We would be better off if credit cards had never been invented.

• The easy availability of credit during the 1920s led to an increase in debt

Which of the following choices describes a recession?

• Supply is greater than demand

• Demand is greater than supply

• Demand increases very quickly

• Supply decreases very quickly

Why did so many banks fail during the Great Depression?

• Back then, banks had no deposits—they only made loans

• The banks had invested all their depositors' money in the stock market

• The banks had used their depositors' money to buy automobiles, radios, and other popular inventions

• The banks had made risky loans that weren't paid back

What do most historians credit with ending the Great Depression?

• The election of Franklin D. Roosevelt in 1932.

• Massive government spending in preparation for World War II.

• The end of World War I

• The passage of the National Recovery Act in 1933.