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Social Science (087) — AI-generated practice question

AI-generated practice question — model-generated for extra practice, not a previous-year CBSE board question.

Q1. [1] straightforward initial-understanding
Which of the following best describes why thousands of US banks collapsed during the Great Depression? (A) The US government raised interest rates sharply, making loans unaffordable. (B) Banks had given out loans that could not be repaid as incomes and prices fell. (C) Foreign countries withdrew their gold deposits from US banks simultaneously. (D) The US stock market was closed by the government, freezing all bank assets.
  1. A The US government deliberately closed banks to reduce inflation.
  2. B Banks could not recover investments, collect loans, or repay depositors as households and businesses defaulted.
  3. C Foreign governments withdrew their gold deposits from US banks simultaneously.
  4. D A series of natural disasters destroyed the agricultural output that banks had financed.
Generated by claude-sonnet-4-6 · 2026-06-26 13:40 · grounding rag
Model Answer

Answer: (B)

Banks could not recover investments, collect loans, or repay depositors as households and businesses defaulted due to falling incomes and prices, forcing thousands of banks into bankruptcy.

Source: The Great Depression, Chapter 3, Section 3.4

Explanation

The passage directly states: "Unable to recover investments, collect loans and repay depositors, thousands of banks went bankrupt." This happened because falling incomes caused households and businesses to default on loans. Options A, C, and D are not supported by the passage — the government did not close banks, foreign gold withdrawal is not mentioned as a cause, and natural disasters are irrelevant here.

Previous-year CBSE Grade 10 board exam questions, organised by subject and chapter, each with a model answer — free to read and print.