Question

27. The US ináation rate

a. was negative 10% for more than a year during the Great De- pression;

b. rose to a positive 25% in 1933 on an annual basis;

c. rose above 25% during WWII and the Vietnam War;

d. All of the above.

28. The policy coinciding with the end of the Great Depression

a. gave consumers the conÖdence to quickly re-deposit their money in bank;

b. established FDIC deposit insurance;

c. reformed the private bank sector;
d. All of the above.

Answer 1

Answer:-

27) Correct answer is Option A which is 'was negative 10% for more than a year during the Great depression.

During the Great depression years, the rate of inflation was negative which means there was deflation instead of inflation. During the year 1932, there was -10.06% to -10.19% inflation.

Option B is incorrect because it does not rose to 25% in 1933 on annual basis. It was 0.8% in 1933.

Option C is incorrect because it does not rose above 25% during WWII and Vietnam war. It was 0% then.

Option D is incorrect because B and C are incorrect.

28) Option B is correct which is 'established FDIC deposit insurance'. When people lose trust in banking system during the Great Depressions, FDIC was created to regain the trust in the American banking system. More than one-third of the banks were failed.

Option A is incorrect because people lose their trust in banking system. They had not deposited their money in banks immediately.

Option C is incorrect because there was no reforms in private banking sector at that time.

Option D is incorrect because Option A and C are incorrect.