Why did bank runs worsen the financial crisis?
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Correct answer: Large numbers of depositors withdrew money at once, causing banks to collapse
A bank run happens when many depositors rush to withdraw their money because they fear a bank will fail. Since banks do not keep all deposits in cash, runs could quickly destroy even weakened but functioning banks.
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More Causes of the Great Depression questions
- 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?
- 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?