Responses
Too many people were asking banks for loans at the same time and the banks didn’t have enough money to lend.
Too many people were asking banks for loans at the same time and the banks didn’t have enough money to lend.
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.
1 answer
The statement that best explains why many banks failed during the Great Depression is:
Because banks are constantly lending money out, if everyone withdraws at the same time, they don’t have enough money to cover deposits.
This highlights the issue of bank runs, where a large number of customers withdraw their deposits simultaneously, leading to a liquidity crisis for the banks that could not cover the withdrawals.
