Which of the following best explains why many banks failed during the Great Depression?(1 point)

Responses

Banks loaned people stocks bought on credit, so when the stock prices decreased, everyone stopped using banks.
Banks loaned people stocks bought on credit, so when the stock prices decreased, everyone stopped using banks.

Because banks refused to give out loans using stocks for collateral, no one was using banks and they went out of business.
Because banks refused to give out loans using stocks for collateral, no one was using banks and they went out of business.

Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.
Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.

Too many people were asking banks for loans at the same time and the banks didn’t have enough money to lend.

1 answer

Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.
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