Canadian Adult Education Credential (CAEC) Practice Test

The main idea is how a sudden, nationwide financial collapse can trigger a prolonged economic downturn. The event that sparked the Great Depression in Canada was the Stock Market Crash of 1929. When the U.S. stock market crashed, confidence collapsed, and investment dried up. Canada was closely linked to the U.S. economy, so demand for Canadian exports—such as wheat, timber, and minerals—plummeted. Prices for goods fell, credit tightened, and banks failed or restricted lending, leading to widespread unemployment and deflation. The downturn spread across provinces and was intensified by agricultural hardships in the Prairies during the early 1930s. The other events listed do not fit as triggers: World War II began later and eventually helped countries recover; the Klondike Gold Rush occurred decades earlier and did not cause the Depression; the Great Fire of Toronto was a disaster but not a national economic trigger.