The widespread fear about the economy contributed to which major outcome?

• A. Quick economic revival
• B. Increased exports
• C. Decreased prices
• D. Economic Depression: 90% of Northern Factories Close, High Unemployment, Homelessness

Answer: (D)

Widespread fear about the economy lowers confidence, and confidence drives spending and investment. When people expect worse conditions, they cut back on purchases and businesses hesitate to invest or hire. That reduction in demand makes production fall, leading to layoffs and rising unemployment. As more people have less income, spending falls further, creating a downward spiral that can push the economy into a deep downturn. The option describing a severe economic depression—factories closing, high unemployment, and homelessness—captures this broad and lasting impact of fear-driven economic decline. The other possibilities don’t align with how fear affects the economy: quick revival requires renewed confidence, increased exports depend on external demand, and while prices may fall during a downturn, the major, sustained outcome is a depression with widespread unemployment and hardship.