What were the key causes of the Great Depression?

• A. Overproduction of goods and low wages
• B. Excessive government spending and high taxes
• C. Stock market crash, bank failures, and high unemployment
• D. Global trade agreements and international investments

Answer: (C)

The key causes of the Great Depression include the stock market crash, bank failures, and high unemployment, making this the correct choice. The stock market crash of 1929 marked a significant and immediate economic downturn, as it erased billions in wealth and led to a loss of confidence in the financial system. Following the crash, many banks failed due to a combination of poor investments and an inability to honor withdrawals, which destabilized the economy further. High unemployment followed as businesses closed or downsized amid falling consumer demand and tightened credit, leading to widespread hardship and a deep, prolonged economic crisis.

In contrast, while overproduction and low wages can be related to economic challenges, they did not singularly precipitate the Depression in the same dramatic way. Excessive government spending and high taxes might affect economic dynamics, but these were not primary factors in the onset of the Great Depression. Global trade agreements and international investments also played a role in shaping economies but were not direct causes of the Great Depression itself. Overall, the combination of the stock market crash, bank failures, and escalating unemployment directly illustrates the critical factors that triggered the economic collapse during this period.