Causes of the Great Depression · US History

How did consumer credit in the 1920s contribute to economic weakness?

  1. Credit was never used for any consumer purchases during the 1920s
  2. Credit made all existing consumer debts disappear automatically and immediately each year
  3. The Constitution explicitly banned all forms of installment buying
  4. Many people bought goods on installment plans and became burdened with debt
Show answer and explanation

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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