Which of the following was a major cause of the Great Depression attributed to the Federal Reserve?

• A. Over speculation
• B. Stock Market Crash
• C. Not enough money in circulation
• D. Failure of the Federal Reserve to protect banks

Answer: (D)

The main idea here is how monetary policy and actions (or inactions) by the Federal Reserve helped deepen the Depression by undermining banks and credit. In the early 1930s the Fed failed to provide enough liquidity to banks and did not act as a lender of last resort when runs on banks began. With banks failing and depositors losing their savings, people withdrew what money they had, leading to a dramatic contraction in credit and a drop in spending and investment. That collapse in the banking system helped spread and prolong the economic collapse, making the Fed’s failure to protect banks a major contributing cause.

The other options describe important events or effects but not the Fed’s direct actions. The stock market crash and over-speculation were triggers rather than Federal Reserve policies. Not enough money in circulation is related to monetary conditions, but it’s the result of broader policy failures rather than the specific failure to shield banks from runs. The core point is that the Fed’s inability or unwillingness to support banks during the crisis helped trigger the deeper banking panic and economic decline.