During the 1920s, the federal reserve increased the money supply and kept interest rates very low, encouraging consumer spending and the brisk borrowing of money. business investment and the expansion of businesses grew rapidly during the 1920 to meet the needs of this huge consumer spending. however, during the crash of 1929, the federal reserve reversed its expansionary monetary policy and cut off the money supply by almost 30%, causing banks to not have enough currency on hand when depositors wanted their hard-earned money. after reading the prompt, what can you surmise happened next that contributed to the great depression? a) black tuesday b) collapse of banks c) high unemployment d) election of franklin d. roosevelt
The correct answer is option C - high unemployment
There was no money or funds left for business to rise and for development when the supply of funds was cut off totally, and this thing led the organizations to cut the jobs. Continuing this to snowball, within the nation, inflation was at its peak, many jobs were disappeared and the result of which caused to the economy and put it to halt.