During the Financial Panic of the Early 1930s

question 45

Multiple Choice

During the financial panic of the early 1930s

• A)the public converted large amounts of currency to bank deposits.
• B)the spread between interest rates on safe and risky securities widened sharply.
• C)spending by large firms declined relative to spending by households and small firms.
• D)banks shifted large amounts of funds from government securities to loans.

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Definitions:

Socialism

An economic system in which the government owns most of the productive resources except labor; it usually involves the redistribution of income.

Private Ownership

The ownership of property and businesses by individuals or corporations rather than by the government or the public as a whole.

Redistribution of Income

The transfer of income and wealth from some individuals to others through a social mechanism such as taxation, charity, welfare, public services, land reform, or monetary policies.

Circular Flow Model

An economic model that depicts the movement of goods, services, and money between households and businesses in an economy.