Question

Which of the following was an indicator of economic instability leading to the Great Depression

Answer 1

Great Depression was mostly experienced by most of the countries in the period of 1930. It had demoralizing effects on the economy by dropping levels of the Gross Domestic Product. The personal income, tax revenue had hit the lowest level in the nation.

Giving Over extension of loans by the banks in order to cope the depression was the erroneous federal policy at the time of depression. It also resulted in various other impacts such as people were unable to pay off the loans. This financial disruption made the banks to close.

This led to stocking of money by the people that resulted in the stagnation of the money flow and the loss of confidence to lend and borrow money. This also reduced the value of money causing disequilibrium in the economy.