Question

Which of the following best describes the impact of the great depression?

Answer 1

B. Economies around the world collapsed

The answer above is correct.

The United States was very involved in European economies, helping restore them after wartime. Once the U.S. economy collapsed, closely connected economies collapsed as well. Keep in mind that the U.S. economy may directly affect economies around the world through the European economies it directly deals with.

Answer 2

Answer:  B. Economies around the world collapsed

The Depression became a global phenomenon because of trade connections to the United States, and the US pulling back from financial involvements elsewhere in the world.  American banks stopped investing, and demanded repayment of loans.

A key example would be the case of Germany.  After the Great War (World War I), Germany was required to pay heavy reparations payments to Britain and France.  Meanwhile, Britain and France owed repayment of funds to the United States for borrowing they had done during the war.  So the United States had been supporting Germany in the 1920s with loans.  When the USA could no longer afford to extend loan monies to Germany after the market crash of 1929, that sent Germany's economy spiraling even deeper into the Depression than was felt in the United States.