Question

read two excerpts from a speech by economist ben bernanke, former chair of the federal reserve. \yet another striking feature of the great contraction depression in the united states was the massive extent of banking panics and failures, culminating resulting in the bank holiday of march 1933, in which the entire us banking system was shut down. during the depression decade, something close to half of all us commercial banks either failed or merged with other banks.\ \the best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in milton friedmans words, a stable monetary background....\ —ben bernanke, 2002 based on these two excerpts, with which statement would bernanke most likely agree? bank failures during the depression were unavoidable no matter what the fed did. the fed caused bank failures during the depression by refusing to lower interest rates. the federal reserve gains too much power whenever there are failing banks or other crises. the federal reserve could have increased the money supply to help failing banks in the crisis.

Explanation:

Bernanke highlights massive bank failures during the Great Depression and emphasizes central bankers’ role in providing a stable monetary background (echoing Friedman’s view that insufficient money supply worsened the Depression). This implies the Fed could have acted to expand the money supply to support failing banks. Option A is incorrect because it claims failures were unavoidable, contradicting the idea of central bank action. Option B misstates the cause (Bernanke focuses on monetary stability, not just interest rates). Option C is irrelevant as power concentration is not mentioned.

Answer:

D. The Federal Reserve could have increased the money supply to help failing banks in the crisis.