Question

Which economic factor was a major cause of the great depression

Answer 1

Answer:

Explanation:

The banks were holding securities that were only worth 1/10 the value of the loans they provided to investors. That means that they were taking 9/10 of the risk. That is far too big a fraction. Investors needed to have more of the share of ownership.

When the markets began to fall that 1/10 was eaten up very quickly and the banks began selling. Now the word on the street was sell, but who was going to buy and so the markets avalanched downwards.

Many banks went bankrupt. That destabilized the economy and the depression came on.

There were other factors as well, like crop failures, but you wanted an economic event.