The passage given below is followed by a set of questions. Choose the most…

The passage given below is followed by a set of questions. Choose the most appropriate answer to each question.

The worst and longest economic crisis in the modern industrial world, the Great Depression in the United States had devastating consequences for American society. At its lowest depth (1932-33), more than 16 million people were unemployed, more than 5,000 banks had closed, and over 85,000 businesses had failed. Millions of Americans lost their jobs, their savings, and even their homes. The homeless built shacks for temporary shelter-these emerging shantytowns were nicknamed Hoovervilles; a bitter homage to President Herbert Hoover, who refused to give government assistance to the jobless. The effects of the Depression-severe unemployment rates and a sharp drop in the production and sales of goods-could also be felt abroad, where many European nations still struggled to recover from World War I.

Although the stock market crash of 1929 marked the onset of the depression, it was not the cause of it: Deep, underlying fissures already existed in the economy of the Roaring Twenties. For example, the tariff and war-debt policies after World War I contributed to the instability of the banking system. American banks made loans to European countries following World War I. However, the United States kept high tariffs on goods imported from other nations. These policies worked against one another. If other countries could not sell goods in the United States, they could not make enough money to pay back their loans or to buy American goods. And while the United States seemed to be enjoying a prosperous period in the 1920s, the wealth was not evenly distributed. Businesses made gains in productivity, but only one segment of the population-the wealthy-reaped large profits. Workers received only a small share of the wealth they helped produce. At the same time, Americans spent more than they earned. Advertising encouraged Americans to buy cars, radios, and household appliances instead of saving or purchasing only what they could afford. Easy credit policies allowed consumers to borrow money and accumulate debt. Investors also wildly speculated on the stock market, often borrowing money on credit to buy shares of a company. Stocks increased beyond their worth, but investors were willing to pay inflated prices because they believed stocks would continue to rise. This bubble burst in the fall of 1929, when investors lost confidence that stock prices would keep rising. As investors sold off stocks, the market spiraled downward. The stock market crash affected the economy in the same way that a stressful event can affect the human body, lowering its resistance to infection. The ensuing depression led to the election of President Franklin D. Roosevelt in 1932.

Roosevelt introduced relief measures that would revive the economy and bring needed relief to Americans suffering the effects of the depression. In his 100 days in office, Roosevelt and Congress passed major legislation that saved banks from closing and regained public confidence. These measures, called the New Deal, included the Agricultural Adjustment Act, which paid farmers to slow their production in order to stabilize food prices; the Federal Deposit Insurance Corporation, which insured bank deposits if banks failed; and the Securities and Exchange Commission, which regulated the stock market. Although the New Deal offered relief, it did not end the Depression. The economy sagged until the nation entered World War II. However, the New Deal changed the relationship between government and American citizens, by expanding the role of the central government in regulating the economy and creating social assistance programs.

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