Causes of the Great Depression: An In-Depth Exploration

Question 1

Which of the following factors significantly contributed to the excessive speculation during the 1920s leading up to the Great Depression?

Accepted Answer

The widespread use of consumer credit buying

Answer

The implementation of the Federal Reserve System

Answer

The enactment of the Sherman Antitrust Act

Answer

The decline in the manufacturing sector

Question 2

Identify the primary failure of the Federal Reserve System that worsened the economic conditions leading to the Great Depression.

Accepted Answer

Failure to increase interest rates to curb excessive speculation

Answer

Failure to provide sufficient liquidity to banks

Answer

Failure to effectively regulate the stock market

Answer

Failure to collaborate with the Treasury Department

Question 3

Describe the "Smoot-Hawley Tariff" and explain its impact on the Great Depression.

Accepted Answer

A protective tariff that raised tariffs on imported goods, exacerbating international trade imbalances

Answer

A free trade agreement that lowered tariffs, contributing to economic recovery

Answer

A tax on personal income that reduced consumer spending

Answer

A government subsidy for businesses that helped to create jobs

Question 4

Explain the role of the "Dust Bowl" in intensifying the economic hardships of the Great Depression.

Accepted Answer

It devastated crops and livelihoods in agricultural regions

Answer

It displaced millions of people from their homes

Answer

It caused a severe drought that crippled transportation

Answer

It had no significant impact on the economy

Question 5

Identify a key factor in the Great Depression that remains relevant to modern economic crises and explain its significance.

Accepted Answer

Excessive credit and asset bubbles

Answer

Government overspending and budget deficits

Answer

Global trade disputes and protectionism

Answer

Natural disasters

Question 6

Which of the following is NOT a characteristic of the Great Depression?

Accepted Answer

Rapid economic growth and technological innovation

Answer

High unemployment and economic contraction

Answer

Deflation and falling prices

Answer

Bank closures and loss of confidence in financial institutions

Question 7

How did the gold standard contribute to the global financial crisis that preceded the Great Depression?

Accepted Answer

It limited central banks' ability to adjust interest rates.

Answer

It allowed countries to borrow more easily.

Answer

It boosted international trade.

Answer

It prevented countries from holding too much foreign currency.

Question 8

How did the Smoot-Hawley Tariff impact international trade and the economy during the Great Depression?

Accepted Answer

Worsened the global economic crisis

Answer

Boosted international trade

Answer

Stabilized the stock market

Question 9

Which policy measure did the United States government implement in response to the Great Depression?

Accepted Answer

Expansionary fiscal policy

Answer

Contractionary monetary policy

Answer

Increased tariffs

Answer

Nationalization of banks

Question 10

Which characteristic is NOT associated with the Great Depression?

Accepted Answer

Increased inflation

Answer

High unemployment rates

Answer

Low economic output

Answer

Widespread bank failures

Question 11

What impact did the Great Depression have on the stock market?

Accepted Answer

Dramatic decline in stock prices

Answer

Suspension of stock trading

Answer

Surge in new stock listings

Answer

Increased foreign investment in the stock market

Question 12

Identify the legislation passed in 1933 that established the Federal Deposit Insurance Corporation.

Accepted Answer

Federal Deposit Insurance Act

Answer

Glass-Steagall Act

Answer

Federal Home Loan Bank Act

Answer

Bank Holding Company Act

Question 13

How effective were government interventions during the Great Depression? Explain the different policies implemented and their impact on the economy and society.

Accepted Answer

Government interventions were somewhat effective, providing some relief but not fully addressing the root causes of the Great Depression.

Answer

Government interventions were ineffective and worsened the Great Depression.

Answer

Government interventions were effective and led to a quick recovery from the Great Depression.

Answer

Government interventions were unnecessary and harmful, making the Great Depression worse.

Question 14

Which of the following ways did the Great Depression worsen global economic and political instability?

Accepted Answer

It led to widespread trade protectionism.

Accepted Answer

It damaged diplomatic relations between countries.

Accepted Answer

It reduced foreign investment.

Answer

It promoted greater international cooperation.

Question 15

How did over-speculation in the stock market contribute to the Great Depression?

Accepted Answer

It led to a rise in stock prices that was not supported by underlying economic fundamentals.

Answer

It caused a shortage of capital for businesses to invest.

Question 16

How did international trade imbalances contribute to the Great Depression?

Accepted Answer

They made it difficult for the United States to export goods.

Question 17

Which of the following individuals is considered to be a major contributor to the study of business history?

Accepted Answer

Alfred Chandler

Answer

Thomas Piketty

Question 18

What was a primary cause of bank failures during the Great Depression?

Accepted Answer

Bank runs and reckless lending practices

Answer

Lack of government regulations

Answer

Global economic downturn

Answer

Technological advancements

Question 19

Which event is widely considered to have triggered the Great Depression?

Accepted Answer

The stock market crash of October 24, 1929

Answer

The failure of the Bank of the United States

Answer

The Hawley-Smoot Tariff of 1930

Answer

The election of Herbert Hoover as president

Question 20

What was the primary purpose of the Federal Deposit Insurance Corporation (FDIC)?

Accepted Answer

To insure bank deposits up to a certain amount

Answer

To regulate the banking industry

Answer

To provide loans to struggling banks

Answer

To promote economic growth through monetary policy

Question 21

Analyze the impact of the Great Depression on the labor market. Identify the key factors that contributed to the high unemployment rates during this period.

Accepted Answer

Reduced demand, technological advancements, and international trade imbalances

Answer

Government policies and international trade imbalances

Answer

Technological advancements and government policies

Question 22

Which of the following is NOT considered a primary cause of the Great Depression?

Accepted Answer

Deflationary monetary policies

Answer

Overproduction and oversupply of goods and services

Answer

Collapse of the banking system

Answer

International trade imbalances

Question 23

How did overspeculation in the stock market contribute to the Great Depression?

Accepted Answer

It created a speculative bubble that eventually burst

Answer

It led to a decline in consumer spending

Answer

It resulted in a rise in inflation

Answer

It caused a collapse in bank deposits

Question 24

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

Accepted Answer

It protected American industries from foreign competition, but led to a decline in international trade

Answer

It increased consumer spending and stimulated the economy

Answer

It stabilized the banking system and prevented further failures

Answer

It had no significant impact on the Great Depression

Question 25

What was a major consequence of the bank failures during the Great Depression?

Accepted Answer

Loss of public trust in the financial system and a decrease in economic activity

Answer

Increased lending activity and economic growth

Answer

Stabilization of the economy and a return to prosperity

Answer

Surplus of bank deposits and increased consumer spending

Question 26

How did the Great Depression shape the role of government in the United States?

Accepted Answer

Increased government intervention in the economy through New Deal policies

Answer

Strengthened the power of the Federal Reserve and decreased government spending

Answer

Led to a decrease in government regulation and laissez-faire economic policies

Answer

Had no significant impact on the role of government

Question 27

Which of the following was a primary cause of the excessive speculation that contributed to the Great Depression?

Accepted Answer

Rapid expansion of lending and consumer credit

Answer

Government spending beyond its means

Answer

Cautious monetary policies by the Federal Reserve

Answer

High unemployment rates

Question 28

What was a significant factor contributing to the widespread bank failures during the Great Depression?

Accepted Answer

Inadequate capital reserves and risky lending practices

Answer

Sharp increases in interest rates set by the Federal Reserve

Answer

Government policies that promoted fiscal expansion

Answer

Sustained economic growth and low unemployment

Question 29

How did imbalances in international trade contribute to the Great Depression?

Accepted Answer

They led to a surplus of goods, deflation, and reduced demand

Answer

They resulted in increased demand for American exports, stimulating economic growth

Answer

They had no significant impact on the global economy

Answer

They helped stabilize economies worldwide

Question 30

What was a key feature of the Smoot-Hawley Tariff?

Accepted Answer

It significantly increased tariffs on imported goods

Answer

It reduced tariffs on imported goods, promoting free trade

Answer

It provided subsidies to American exporters to boost exports

Answer

It established free trade zones to eliminate tariffs within certain areas

Question 31

Which economist developed the influential theory that insufficient aggregate demand led to the Great Depression?

Accepted Answer

John Maynard Keynes

Answer

Milton Friedman

Answer

David Ricardo

Answer

Karl Marx

Question 32

How did the Great Depression impact the American labor movement?

Accepted Answer

It led to a decline in union membership and weakened their power

Answer

It strengthened labor unions and increased their influence in the economy

Answer

It had no significant impact on the labor movement

Answer

It resulted in the formation of new labor unions and increased worker organization

Question 33

Which of the following is a key lesson learned from the Great Depression?

Accepted Answer

Government intervention can play a role in mitigating economic downturns

Answer

Free markets always self-correct and government intervention is harmful

Answer

Economic growth is inevitable and recessions are a thing of the past

Answer

Quantitative easing is always an effective tool to stimulate economic recovery

Question 34

What was a primary factor in the agricultural crisis that contributed to the Great Depression?

Accepted Answer

Overproduction of agricultural goods, leading to falling prices and farm bankruptcies

Answer

Drought and other adverse weather conditions that reduced crop yields

Answer

Increased demand for imported food products, reducing demand for domestic goods

Answer

Technological advancements in farming that led to increased productivity and lower costs

Question 35

How did the Great Depression affect the banking system in the United States?

Accepted Answer

It led to a loss of public trust in banks, bank runs, and widespread bank failures

Answer

It strengthened the banking system and increased public confidence

Answer

It had no significant impact on the banking system

Answer

It resulted in the creation of new banking regulations and protections

Question 36

What was the primary purpose of the Smoot-Hawley Tariff of 1930?

Accepted Answer

To protect domestic industries from foreign competition

Answer

To raise government revenue

Answer

To stimulate economic growth

Answer

To promote international trade

Question 37

The failure of which bank in 1933 is widely considered to have triggered the bank panic?

Accepted Answer

Bank of America

Answer

JP Morgan Chase

Answer

Northern Trust

Answer

Federal Reserve Bank of New York

Question 38

Which New Deal program was designed to provide jobs and stimulate infrastructure spending?

Accepted Answer

Works Progress Administration

Answer

Federal Deposit Insurance Corporation

Answer

Social Security Act

Answer

Glass-Steagall Act

Question 39

What was the primary purpose of the Glass-Steagall Act?

Accepted Answer

To regulate the banking industry and prevent conflicts of interest

Answer

To increase credit availability to businesses

Answer

To create a central bank

Answer

To provide financial assistance to homeowners

Question 40

In what year did the stock market crash that marked the beginning of the Great Depression occur?

Accepted Answer

1929

Answer

1927

Answer

1931

Answer

1933

Question 41

What was the main purpose of the Federal Deposit Insurance Corporation (FDIC)?

Accepted Answer

To insure bank deposits and restore confidence in the banking system

Answer

To regulate the stock market

Answer

To provide low-interest loans to businesses

Answer

To create a national unemployment insurance system

Question 42

Which of the following is a well-established factor in causing the Great Depression?

Accepted Answer

Oversupply of goods and services

Answer

Insufficient technological advancements

Answer

Rapidly increasing consumer spending

Answer

Excessive government regulation

Question 43

What was a direct result of the stock market crash of 1929?

Accepted Answer

Loss of confidence in the financial system and economy

Answer

Increased government intervention in the economy

Answer

Stimulation of economic growth

Answer

Expansion of investment opportunities

Question 44

How did bank failures contribute to the Great Depression?

Accepted Answer

Reduced available credit for businesses and consumers, stifling economic activity

Answer

Provided greater financial security for depositors

Answer

Stimulated economic growth through increased lending

Answer

Increased public trust in the banking system

Question 45

Which of the following international factors worsened the Great Depression in the United States?

Accepted Answer

High tariffs and trade barriers

Answer

Increased foreign investment

Answer

Expansion of global trade

Answer

Stable currency exchange rates

Question 46

What distinguished the Great Depression from previous economic downturns?

Accepted Answer

Its unprecedented global scale, severity, and duration

Answer

Its minimal impact on unemployment rates

Answer

Its relatively short duration

Answer

Its exclusive impact on the manufacturing sector

Question 47

Which of the following was a significant government initiative implemented to address the Great Depression?

Accepted Answer

New Deal programs

Answer

Monetary tightening through interest rate hikes

Answer

Laissez-faire approach of minimizing government intervention

Answer

Increased taxes to raise government revenue

Question 48

How did the Great Depression impact the U.S. labor market?

Accepted Answer

Mass unemployment and widespread job losses

Answer

Improved wages and benefits for workers

Answer

Expansion of the middle class and increased job opportunities

Question 49

Which of the following is a long-term consequence of the Great Depression?

Accepted Answer

A shift in the role and responsibilities of government in the economy

Answer

Complete eradication of poverty

Answer

Swift return to economic prosperity

Question 50

How did the Great Depression influence the development of economic theories and ideas?

Accepted Answer

It challenged prevailing classical economic views and led to new theories

Answer

It reinvigorated the principles of laissez-faire economics

Answer

It resulted in the complete rejection of government intervention

Answer

It had no significant impact on economic thought

Question 51

Which of the following factors is NOT considered a contributing factor to the Great Depression?

Accepted Answer

Excessive consumer spending beyond their means

Answer

Uncontrolled speculation in the stock market

Answer

Widespread bank failures

Answer

Weakening of international trade and global economic interconnectedness