The Federal Reserve acted quickly and appropriately to diffuse the Great Depression.

Question

Quizplus · Accepted Answer

The Federal Reserve's tight monetary policies during the early years of the Great Depression have been widely criticized for worsening the economic downturn. The Fed's decision to raise interest rates and reduce the money supply in 1929 and 1930 made it more difficult for banks to lend and for businesses to invest, exacerbating deflation and unemployment. It wasn't until 1932 that the Federal Reserve began to implement expansionary policies, which helped to stabilize the economy but did not fully reverse the damage done by the previous years of contraction.

The Federal Reserve Acted Quickly and Appropriately to Diffuse the Great