Which of the following best explains how the money supply changed during the early part of the Great Depression?
A) In the early part of the Great Depression,the money supply increased due to uncertainty and unemployment.
B) In the early part of the Great Depression,the money supply decreased due to individuals withdrawing funds and holding more currency.
C) In the early part of the Great Depression,the money supply increased due to individuals withdrawing funds and holding more currency.
D) In the early part of the Great Depression,the money supply increased due to huge bond-buying programs by the Federal Reserve.
E) In the early part of the Great Depression,the money supply decreased due to huge bond-buying programs by the Federal Reserve.

Question

Quizplus · Accepted Answer

During the early part of the Great Depression, many individuals lost confidence in the banks and started withdrawing their funds, leading to a decrease in the money supply. This was exacerbated by the Federal Reserve's decision to raise interest rates and reduce the money supply even further.

Which of the Following Best Explains How the Money Supply