AP US Historyhardmcq1 pt

Which of the following best explains the mechanism by which federal deposit insurance ended the epidemic of bank failures in the early 1930s?

A.It insured deposits, restoring confidence so that savers no longer rushed to withdraw their money
B.It printed new currency to replace all deposits
C.It nationalized every bank in the country
D.It loaned money only to the largest banks

Explanation

Core Concept

Thousands of banks had failed as depositors raced to pull out funds. Federal insurance of deposits up to a set amount persuaded the public that savings were safe, which stopped the runs.

Correct Answer

AIt insured deposits, restoring confidence so that savers no longer rushed to withdraw their money

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