The Great Depression Test Review Questions and Answers 100% Correct(SCORED A+)

Why was 1929 so important? - ANSWER-Stock market crashed Overproduction : Cause - ANSWER-Identify : made more goods than sold How did this lead to the depression? : people didn't buy the goods Stock Market Speculation : Cause - ANSWER-Identify : Low interest rates encourage borrowing money to speculate endangering banks How did this lead to the depression? : invested in real estate Shaky Banking and Bank Failures : Cause - ANSWER-Identify : Bankers who invested their deposits in unsound investments How does this lead to the depression? : made economy extremely vulnerable Tariffs on World Trade : Cause - ANSWER-Identify : Protected American markets but they made it hard for producers to sell How does this lead to the depression? : shrinking of world trade Monetary policy of the Federal Reserve System : Cause - ANSWER-Identify : The governments ability to control how much money is in the economy or banking regulation. How does this lead to the depression? : Credit stopped, but interest rates did not drop. The money supply was reduced instead of increasing it. What is the Federal Reserve act? Describe America shift from the gold standard to fiat money. - ANSWER--It established the federal reserve system whose role was reduced to swings in the economy by controlling the ability of banks to lend money. -In 1933 Roosevelt outlawed ownership of gold except for jewelry. FDR wanted people to rely on paper money (fiat money) to spend money and stimulate the economy. How did Great Depression affect the society? - ANSWER-Families : Jobs were lost, income lost, lack of food lost homes, fought for survival. Children : Homeless, hungry