What is deflation, a major problem during the Great Depression?
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Correct answer: A general fall in prices that can increase the real burden of debt
Deflation means prices fall across the economy. Although lower prices may sound helpful, deflation can reduce wages, discourage spending, and make debts harder to repay.
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More Causes of the Great Depression questions
- Which industry showed signs of weakness before the stock market crash and was important to the broader economy?
- Why did the stock market crash not by itself fully explain the Great Depression?
- How did falling consumer demand affect businesses during the early Depression?
- Which statement best summarizes the causes of the Great Depression?
- What was the stock market crash of 1929?
- Which date is commonly known as Black Tuesday?