Which of the following were causes of the Great Depression?

• A. Stock market crash of 1929, bank failures, and drought
• B. World War II spending and technology boom
• C. The New Deal and regulatory reform
• D. Prohibition and immigration restrictions

Answer: (C)

The main idea is that the Great Depression began from tangible economic shocks that hit many people at once. The stock market crash of 1929 wiped out a lot of wealth and shook confidence, making people and businesses pull back on spending and investment. Bank failures erased the savings of thousands and cut off access to credit, which forced businesses to close and people to lose their ability to buy goods. A severe drought—the Dust Bowl—devastated farming regions, destroying crops and livelihoods, which reduced demand and increased hardship. Put together, these events created widespread unemployment, falling prices, and a brutal contraction in economic activity that lasted for years.

The other factors aren’t the causes: the New Deal and regulatory reforms came afterward as attempts to fix the economy; World War II spending and a tech boom helped lift the economy later—but not the trigger of the Depression; Prohibition and immigration restrictions had limited direct impact as the primary cause of the downturn.