Question

The money supply fell during the Great Depression because __________

Answer 1

Answer: the public held more currency, and the banks held more excess reserves

Explanation:

The Great Depression, was an economic downturn which brought about the reduction in output, mass unemployment, reduction in investment, banking panics etc.

Some of the factors that led to the Great Depression were the crash in stock market, banking panics which led to reduction in loanable funds. The money supply reduced because the public held more currency, and the banks held more excess reserves.