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SAT® Subject Test in U.S. History

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Bank Failures

SATUSH-CUT4YE

By 1932, nearly 9,000 American banks had failed, plummeting the nation into the worst economic disaster in American history.

What was the primary reason so many banks failed during the period?

A

Great Britain and France had failed to repay the loans taken out during the First World War.

B

Many Americans failed to save money during the decade due to consumer spending on luxury goods.

C

Widespread embezzlement and corruption in the banking industry had depleted bank reserves.

D

Many loans were made to individuals and businesses unable to repay such loans.

E

The Federal Reserve System relaxed its monetary policies to allow American businesses to prosper during the 1920s.