In response to the destructive bank panics of the Great Depression,future bank panics are designed to be prevented by

Question

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The establishment of the Federal Deposit Insurance Corporation (FDIC) in 1933 helped prevent future bank panics by insuring deposits up to a certain amount, thus reducing the likelihood of bank runs. This provided greater stability to the banking system and increased public confidence in banks. Choice A is partially correct as the Federal Reserve System acting as a lender of last resort also helped prevent bank panics, but it was not the only solution. Open market operations (Choice B) and the fractional reserve system of banking (Choice D) were already in place before the Great Depression but were not enough to prevent bank failures. Increasing the required reserve ratio to 100% (Choice E) would essentially eliminate fractional reserve banking, which could have adverse effects on the economy as it would reduce the amount of money available for lending and investment.

In Response to the Destructive Bank Panics of the Great