How did consumer credit in the 1920s contribute to economic weakness?
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Correct answer: Many people bought goods on installment plans and became burdened with debt
Installment buying allowed consumers to purchase goods by paying over time. While it boosted sales in the short term, growing debt made households vulnerable when incomes fell.
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More Causes of the Great Depression questions
- What happened when many banks failed during the early Great Depression?
- Why did bank runs worsen the financial crisis?
- Which international factor helped spread the Great Depression globally?
- How did high tariffs such as the Smoot-Hawley Tariff worsen the Depression?
- Which statement best describes the Federal Reserve's role in the early Depression?
- What is deflation, a major problem during the Great Depression?