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How did the closure of banks contribute to the economic damage during the Great Depression?

A. Improved investment opportunities and encouraged new savings accounts.
B. Strengthened the overall economy by fueling job creation.
C. Encouraged new banking regulations to protect the borrowers.
D. Hindered the ability to distribute money to depositors.



Answer :

Final answer:

The closure of banks during the Great Depression led to economic instability, reduced investment, and lack of trust in the banking system.


Explanation:

The closure of banks during the Great Depression contributed to economic damage by causing widespread financial instability and loss of savings for depositors.

Banks' failure to meet depositors' demands for withdrawals led to a decrease in liquidity and investment, exacerbating the economic downturn.

Without government deposit insurance at that time, the lack of trust in banks led to a reduction in loans to businesses, affecting various sectors of the economy and contributing to the severity of the depression.


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