Bank lending channel advocates are skeptical of Milton Friedman and Anna Schwartz's explanation of the role of banking panics in explaining the Great Depression, because they believe Friedman and Schwartz failed to take into account the effect of the banking panics on
A)the supply of money.
B)interest rates.
C)the availability of bank loans.
D)consumer confidence.

Question

Quizplus · Accepted Answer

Bank lending channel advocates believe that banking panics affected the availability of bank loans, as individuals and businesses became reluctant to borrow from banks that were perceived to be at risk of defaulting. This reduction in the supply of credit could have contributed to the severity and duration of the Great Depression.

Bank Lending Channel Advocates Are Skeptical of Milton Friedman and Anna