What was one consequence of recalling loans during the Great Depression?

What was one consequence of recalling loans during the Great Depression?

• A. German businesses flourished
• B. Workers received bonuses
• C. Increased unemployment due to business bankruptcies
• D. Workers were promoted to better jobs

Answer: (C)

The consequence of recalling loans during the Great Depression was an increase in unemployment due to business bankruptcies. When financial institutions demanded repayment of loans, many businesses, particularly small and medium-sized ones, were unable to meet these demands. This situation led to a significant reduction in available capital for operations, forcing many businesses to close down or downsize. As businesses went bankrupt or cut back on their operations, layoffs became inevitable, resulting in higher unemployment rates. The economic environment created by the recalling of loans exacerbated the existing financial crisis, leading to a downward spiral in the economy. Increased unemployment further diminished consumer spending, creating a challenging environment for remaining businesses, which could also lead to more bankruptcies. Thus, the recalling of loans directly contributed to a cycle of economic decline and increased joblessness during this turbulent period.

The consequence of recalling loans during the Great Depression was an increase in unemployment due to business bankruptcies. When financial institutions demanded repayment of loans, many businesses, particularly small and medium-sized ones, were unable to meet these demands. This situation led to a significant reduction in available capital for operations, forcing many businesses to close down or downsize. As businesses went bankrupt or cut back on their operations, layoffs became inevitable, resulting in higher unemployment rates.

The economic environment created by the recalling of loans exacerbated the existing financial crisis, leading to a downward spiral in the economy. Increased unemployment further diminished consumer spending, creating a challenging environment for remaining businesses, which could also lead to more bankruptcies. Thus, the recalling of loans directly contributed to a cycle of economic decline and increased joblessness during this turbulent period.