Question

Based on the information provided, which statement BEST describes one cause of the Great Depression?

Answer 1

People were not buying new cars at the same rate they had in the early 1920’s which led to increased unemployment.

Answer 2

Even though there are no answer choices, here is some information that will help:

1) Buying on margin- Individuals bought stocks by putting 10% of their own money down and then borrowed the rest from the bank. When the Stock Market Crash in 1929 occurred, thousands of individuals lost their money and could not repay their loans.

2) Excessive spending on material goods- Due to the prosperous economy, millions of Americans spent money on luxury goods they could not afford to pay off, especially after the stock market crash.

3) Bank failures- Thousands of banks all across the US failed due to their lack of regulation and insistence on giving out a huge amount of bad loans.